Ethical Wills and Donor Legacy Statements: Passing on More Than Financial Wealth
This issue of Family Giving News examines the growing use of ethical wills and donor legacy statements: What are they? Why might you and your family want to use one? And how can one of these statements benefit individual donors, their families and the causes and issues they care most about? How can ethical wills or donor legacy statements ease anxieties about preserving donor intent and smooth the road to succession? How do I write one? In addition, this issue of Family Giving News includes links to sample ethical wills and legacy statements, and lists of additional online and print resources for further study.
Ethical Wills: Passing on More Than Financial Wealth
“It’s not only who gets the grandfather clock, but who was grandfather?”
-Tom McMillan, a Denver estate-planning attorney in the Family: Ethical Will Power
In the early part of the twenty-first century, when global political, economic, and social turmoil are making life seem particularly tenuous, an increasing number of people have become interested in including ethical wills in their estate planning. An ancient Hebraic tradition, of which evidence can be found as far back as biblical times, an ethical will was originally an oral record of a decedent’s emotional life—aspirations, fears, triumphs, defeats, lessons learned and experiences yet unlost—passed to his heirs. As our population ages and begins to consider its legacy, many people—of varying economic and social backgrounds—are turning back to ethical wills to safeguard the transition of their assets. While not a replacement for a traditional will, an ethical will is a good way to augment what can often be a cold and impersonal document filled with legalese and devoid of any spiritual guidance. Much the same way as a traditional will provides for the transfer of material wealth, an ethical will ensures the perpetuation of a donor’s spiritual wealth; committing to collective memory that person’s experiences, values, and personal reflections.
The tone and components of an ethical will are as varied as the people who write them: some are formal and detailed, others more informal and conversational. A terminally-ill grandfather already possessing a well-thought out standard will, might write an ethical will composed entirely of his life experiences and hopes for his children and grandchildren with no relationship at all to his material possessions. He might even choose to write a letter to each family member or record an audio or videotape. By contrast, a textile heiress in possession of $50 million in property and assets might draft an ethical will explaining that she left $30 million dollars to a local animal shelter because a cat rescued from there brought her great happiness in her last years.
Depending on the impetus underlying the drafting of the will, it might include any or all of the following:
- a list of advisors, attorneys, accountants, and other financial managers
- a list of assets: investments, properties, life insurance policies, bank accounts
- a list of debts
- general information: social security number, date and place of birth
- a family history
- a personal history
- a personal statement detailing the person’s greatest wisdom, biggest regrets, and/or moments of triumph
Certainly many of the ethical wills drafted today still serve to pass along family history or convey difficult unexpressed emotions, but more recently ethical wills—although they are not in any way legally binding—have been appearing as companions to material bequests. In many cases, an ethical will can provide an explanation for the terms of a traditional will, and perhaps prevent strife among heirs who question the traditional will’s validity or soundness.
Sample Ethical Wills
- Ethical Wills drafted by varying age groups under different circumstances at Barry K. Baines’ EthicalWill.com.
Additional Resources on Ethical Wills
- Baines, Barry K. Ethical Wills: Putting Your Values on Paper. Perseus Publishing, 2002.
Donor Legacy Statements: Passing on a Philanthropic Tradition
Although similar in spirit to ethical wills, donor legacy statements record history, values, hopes, and dreams of family foundation founders and their boards. These statements are typically intended to guide and inform the ongoing grants and activities of the foundation, and serve as a compass in times of uncertainty.
Why Have One?
A donor legacy statement can be an excellent tool for solidifying long-term goals for a foundation, and ensuring that the values, impetus, and ethos behind giving remain in tact as the organization moves forward. Donor legacy statements can be particularly helpful to family foundations preparing for the transition of leadership to successive generations. Children, grandchildren, great-grandchildren and other future board members may or may not have any personal memories of the founding donors to guide them, and a donor legacy statement is a wonderful way of keeping these memories and values alive.
Successive generations of family and/or the foundation board can continually refer to the statement of legacy to resolve any doubts about how to allocate funds or focus the direction of the foundation, even after historical developments have changed the climate in which the original grants were given.
“Such a statement could ease any lingering doubts or anxieties family members might have about giving away inherited wealth or assuming responsibility for more of the foundation’s grantmaking.”
–Mary Phillips, consultant to the Stoneman Family Foundation in Living the Legacy.
You’ve Got the Why. Here’s the When and How:
When is the best time to draft a donor legacy statement?
Experts seem to agree: the sooner, the better. It’s best, they say, to write the statement in the foundation’s development stages, before things get chaotic and it takes a backseat to more pressing concerns. Write your donor legacy statement knowing that it is a fluid document and can be refocused and reworked as the foundation grows, and needs and hopes evolve. In fact, it’s often recommended that successive generations add their own clauses to the foundation’s donor legacy statement to encourage a commitment to philanthropy in those generations and to allow a foundation to adapt to a changing world.
How do I develop a donor legacy statement?
While some donor legacy statements are the product of the express wishes of the first generation of donors in a family foundation, some are the result of a more collaborative process. Some donor legacy statements are formal, detailing concrete goals for the foundation and board; others are less so, amounting to a collection of stories and anecdotes about the founding generation that convey a general sense of their lives and values.
Some things that might appear in or contribute to a donor legacy statement:
- the donor’s life and accomplishments
- the causes the donor is interested in (generally or with reference to specific organizations) that grow out of that background
- the values, traditions, and perspectives that animate the donor’s life and giving history
- the resulting specific intent of the donor for the foundation
- the way the donor wishes succeeding generations of trustees to perpetuate this legacy over time
—From Living the Legacy