"Good parents give their children Roots and Wings." --Jonas Salk

The giving season is upon us. As our thoughts and wallets turn toward Thanksgiving and the holidays, we search for the perfect gift for those we love.

The opening quote is attributed to the man who knew a thing or two about powerful gifting, having given the world a cure for polio. While his observation pertains specifically to gifts from parents to their children, it has wider application to anyone hoping to bestow meaningful gifts, including financially significant gifts, often called “bequests” or “legacies.” It suggests that gifts have a dual aspect: they “free” their recipients, in terms of offering opportunity and self-determination, while also grounding them in a sense of belonging and tradition.

Clearly this is a heavy philosophical load to put upon all the stocking stuffers, gift cards, bottles of wine and boxes of candy we will be exchanging this holiday season. Let’s consider the “big” stuff – the significant financial gifts we hope to make to our loved ones, and how to plan for making them.

Usually thought of as end-of-life gifts, bequests or legacy gifts can nevertheless be part of our giving today.  Regardless of when given, they require careful thought and planning in order to make them meaningful. A hastily written check or wire transfer, no matter the commas or zeroes in the amount, won’t work. While the recipient of such a check or transfer may see all sorts of “wings” in those zeroes, where are the “roots”? Where is your voice and wisdom in helping them to use the gift wisely?

Traditional estate and gift planning provides only limited answers. (Note: We will be talking about this topic next week in “Estate Plans 101.”) Transfers in trust can be better than outright gifts when you wish to provide some direction on when and why the gift may be used. For example, you may put money or assets in a trust to be distributed to your child at age 40, or upon request to a trustee for purposes of health or education. Think of these provisions as the “strings” you attach to the gift.

But strings are not roots.  What’s still needed is a statement of your own history, beliefs, and principles: in short, your values. When these values accompany the transfer of your valuables, you have the makings of a truly meaningful gift.

Such is the purpose of an ethical will, or a legacy letter. Derived from a medieval rabbinical tradition, these communications have become popular in the last few decades.  It is now possible to get templates for ethical wills online or in book form, or even hire a consultant to draft one for you.

What goes into these communications?  While highly personal and unique to the drafter, the following elements are often included:

  • A statement of values:  Here you might share the principles, ideals and institutions that are important to you, and the impact they’ve had on the important decisions you’ve made during your life. In short, what have you stood for.
  • A family history:  With the online genealogy tools available today, it’s fairly easy to trace our family tree back through several generations. This may provide an important traditional context for the values we hope to pass on to our heirs.  In cases where a legacy of family wealth is involved – created perhaps by a family business or an multi-generational legacy – you may wish to describe how this wealth was originally created, and how it has grown or been managed through the years.  What were the sacrifices made and opportunities pursued that allow you to pass on this wealth to your own heirs?
  • Life lessons:  As often as you may have verbally shared the wisdom you’ve acquired in life with your children or other loved ones, setting it down again in writing can earn it the enduring attention you believe it deserves.
  • Professional advisors:  It can be incredibly helpful to heirs to have a list of the advisors – financial planners, attorneys, insurance brokers, accountants, real estate agents – who may have assisted you in managing the wealth that will be passed to others.  Receiving an inheritance, particularly if it is sizeable, can be disorienting and even stressful for your beneficiaries.  You can help them through this difficult time by pointing them to professionals they can trust, and advising them on when and how to work with these professionals.  If it’s unlikely or impractical for them to work with these same advisors, perhaps because of geographical constraints, you can nevertheless advise them how to choose these professionals.  For example, choosing a financial advisor who has earned the CFP® certification speaks to the competence, experience, and ethics of the advisor.

Be aware that your ethical will or legacy letter is not a legally binding document. Nevertheless it generally carries considerable emotional and spiritual weight with its intended recipients.  It shouldn’t be tucked away, to be read once you are no longer here, but considered, planned, and talked about now with your family.  This holiday season is a perfect time for focusing on the “roots and wings” of meaningful giving.