Warren Buffett is credited with saying, “It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.”
When we’re young, it seems like we have an easier time with the first part of the quote. We begin cataloging situations where we say, “I’m never doing THAT again.” But we still think we’re immune to certain problems—until they happen to us.
For example, your dad might have said, “Don’t drive around with less than a quarter tank of gas. You’ll end up on the side of the road.”
Your reply, “Dad, I know my car,” seemed true. Until that time you ran out of gas.
But the longer we live, the more we recognize the value of the second half of Buffett’s quote. When someone we know makes an unfortunate decision, we’re increasingly willing to learn from their mistake.
This can be especially valuable when the lesson to learn comes from family. There’s (hopefully) a level of concern that a grandparent, aunt or uncle, or parent has for the next generation to avoid the penalties of making the same mistakes they did.
Starting about 30 years ago, a document known as a “legacy letter” began to become a common addendum to people’s wills.2 Such letters were an encapsulation of a person’s non-financial legacy. They would list key milestones, places, and relationships in the deceased person’s life. And they would usually detail the thoughts, obstacles, and lessons they experienced along the way.
Stephen B. Dunbar III, an attorney and cofounder of Equitable Advisors, suggests that you not wait until late in life to compose this final letter (also known as an “ethical will”).
“Instead of hastily writing it in hindsight during old age, you should be constantly capturing major milestones, lessons and experiences in your life as they happen. That way future generations of your family can read, watch and, crucially, learn from them further down the line.”
You’ll want to include your failures as well as your successes. The decisions you made that were mistakes. And the times you hit a brick wall, but got back up, you got stronger. Conveying those hard-learned lessons can be invaluable.
In addition to passing along the wisdom you’ve gathered, an ethical will can enable you to earmark assets to go toward what you believe to be important. Dunbar suggests that if your goal is to inspire the next generation to pursue a particular path (such as a certain career), you can make provision in your will to provide financial support if they pursue that specific goal.
Another benefit of thinking about your non-financial legacy now is that it will cause you to reflect on and record what you have been learning so far. You still have a chance to learn from your own mistakes.
You as a person are so much more than your financial assets.
As the old year ends and the new one begins, it’s the perfect time to reflect and begin documenting your most valuable lessons. If you have questions about an ethical will, your advisor will be happy to find answers and direct you to the appropriate resources.