Beyond a Will – Consider a Personal Legacy Document

Written by Caroline Calder Wednesday, January 04 2012

Philanthropy is part of the fabric of the American culture. While it is influenced by the economy, history shows that Americans give amply regardless of the economic climate. More than 98 percent of affluent Americans give to charity annually, and in 2010, more than $290 billion was donated to charities, a 3.8-percent increase over giving in 2009, according to “Giving USA 2011: The Annual Report on Philanthropy for the Year 2010.”

Bottom line: America is a generous nation that looks to have a positive impact on individuals and communities here and around the world.

To that end, women tend to be far more philanthropically inclined than men, not only in the giving of time and talent to charitable organizations, but also with money. It's important to women to pass down not only money, but also core values and hopes for future use – intangible assets.

But how do you transfer the intangibles and, at the same time, fulfill philanthropic aspirations? The answer: through philanthropic planning and creating a personal legacy document.

Philanthropic Planning
Philanthropic planning is not reserved just for the "über-wealthy." Regardless of the amount of money you have accumulated and plan to pass on, it is essential to have a current will, financial and estate plan. Philanthropic planning can easily be included in all of these. Your financial and/or legal adviser can work with you to create a gifting strategy. Depending upon your financial situation, there could also be certain tax advantages to consider.

The creation of a gifting mechanism can be tailored for just about anyone. This includes "checkbook philanthropy" (direct gifts of cash via check or credit card), bequests, beneficiary designations, or other, more structured, gifting vehicles such as a charitable remainder or charitable lead trust, a private foundation, a donor-advised fund, or charitable gift annuity. Your financial, tax and/or legal adviser can discuss an appropriate option(s) with you based on your philanthropic goals and specific financial/tax situation.

There are many variations on gifting, and each provides different benefits for you, your family, and charities. From a simple bequest in your will to establishing a private foundation, you will be able to fulfill you philanthropic wishes while potentially adding estate planning or tax planning value from your giving.

A Personal Legacy Document or "Ethical Will"
You may think outlining your philanthropic wishes in your will or other legal document is enough. In the legal sense, it is – for your tangible assets. However, what normally isn't outlined in a will or other legal document is how you wish to pass down the intangibles in life to the generations to come, ensuring the charitable gifting of their assets continues to reflect those values, hopes, and wishes.

Creating a personal legacy document, also known as an "ethical will," links one generation to another and serves as a vehicle for capturing and passing on to subsequent generations personal values, reflections, and information that are too important to withhold.

It is comprised of a letter, stories, pictures, audio or video recording created for your descendants and/or successors. While often shared during life, a personal legacy document is created to last beyond your lifetime to communicate feelings, values, wisdom, wishes, advice, or important information not contained in your will or estate planning documents.

Creating a personal legacy document can be a profoundly meaningful and satisfying personal experience; and it can be equally profound, meaningful, and very helpful to those fortunate enough to receive it.

While you must be sure your document does not contradict or confuse any aspects of your will or estate plan (those legal documents take precedence), it is an important component of a plan because it complements the legalese governing the distribution of tangible assets with your own “voice.”

When and How to Start an "Ethical Will"
No time like the present, but realistically it may take a transitional period in your life to prompt a start – marriage, divorce, birth of a child or grandchild, anniversaries, retirement, a medical diagnosis, becoming an empty-nester, etc. Whenever you begin your personal legacy document, the following steps will help get you going:

• Identify Who You Will Address – Your spouse, children, grandchildren, nieces, or nephews? It can be anyone.
  
  
• Compose the Introduction – Consider your intentions and draft opening lines. Describe the purpose of the document and why it's important.
  
  
• Decide What Will Be Included in the Body – Identify themes: charitable desires, hopes, dreams, passions, personal stories, values, beliefs, life lessons, and work ethic. Clarify your wishes further with phrases like, "I hope you will remember your heritage and pass on a legacy of……." or, "Never take for granted…."
  
  
• Consolidate What is Most Important to Express – Bring it all together by integrating reflections into an outline and making sure your top priorities are included.
  
  
• With the Outline and Notes Created as a Guide, Compose the Personal Legacy Document – When it's finished, it should be signed and dated. Also, keep instructions handy as to where to find it, especially if it's a file on your computer.

This is a highly personal endeavor; however, consider having a trusted professional adviser help you. Their help will keep you focused and can help keep your "ethical will" in line with your legal documents. An adviser can take notes so nothing is left out or forgotten, and an adviser can assist in organizing all the information. The adviser can also be an impartial listener as you sort through your thoughts.

If you create your "ethical will" without help, be sure to periodically contact your financial adviser, CPA, and/or attorney so they are aware of the document's existence and to ensure it is properly aligned with your will, financial, and/or estate plans.

Finally, your "ethical will" should be thought of as a "work in progress." Be sure to update it as you remember or discover things that you want included.

The peace of mind a personal legacy document can bring is enormous. The wisdom, life lessons, and strong charitable passions that constitute your personal legacy are preserved for generations to come. What better way to ensure that your philanthropic wishes are fulfilled and passed down in the context of your values, not just your "value."

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Caroline Calder is a financial adviser with the Wealth Management Americas group of UBS Financial Services Inc. She has more than 25 years of investment management experience overseeing the investment portfolios and private wealth management needs of individuals, family offices, endowments, foundations, and nonprofit organizations. Prior to joining UBS, she held trading, portfolio management, and senior investment management and advisory roles with Deutsche Bank, JPMorgan Chase, Avatar Associates, SunTrust Bank, and Morgan Stanley. Based in Atlanta, Calder works with clients located across the United States.

Neither UBS Financial Services Inc. nor any of its employees provide legal or tax advice. Consult with your legal and/or tax advisers about your personal circumstances.