An ethical will, also known as a "legacy letter" or "living legacy," is a document that is often given to family and loved ones, while the writer is still alive to go over matters not covered in the will. A legacy letter helps the writer explain to younger generations his or her reasons for setting up the will in a certain way and what they hope to accomplish through their estate plan. In writing the letter, the author is also adding to the probability that his or her wishes will be followed.
Some, like me, don’t like the term 'ethical will' and prefer to call it a legacy letter. There are enough confusing terms when it comes to estate planning (think: Will vs Living Will). There is no need to add to the confusion by calling a legacy letter a will since it is not a binding legal document nor is it necessarily about ethical concerns. A legacy letter is often written to accompany a formal will, however. Regardless of what it's called, the legacy letter is just that: a letter the intent of which is to identify those character traits and family values the author would more like to see perpetuated. It can explain that what they have to pass on to loved ones can be much more valuable than finances.
These letters are designed to be unique and personal, even if they’re used to clarify how and why an estate is being allocated in a certain way. The goal of an ethical will is to pass along, in a person’s own words, what they're hoping to accomplish with their estate.
Reference: Investment News (June 19, 2018) “Advisers use ethical wills to look beyond client assets”