The Missing Part of Your Estate Plan - Letter of Intent
Writing a letter of intent (LOI) to accompany your estate planning documents is a great way to provide guidance to your loved ones and make your intentions clear. This letter serves as a personal note, offering insight into your wishes that may not be explicitly outlined in your legal documents. Here are some key steps to craft a thoughtful and effective letter of intent:
1. Title and Introduction
Start by labeling the document as a "Letter of Intent" or "Personal Letter of Intent for Estate Planning." This will immediately clarify its purpose.
Example:
"Letter of Intent for Estate Planning"
Date: [Insert Date]
Dear [Name of Recipient/Family Member],
2. Express Your Intentions
In the opening paragraph, explain the purpose of the letter. Acknowledge that the letter is intended to provide clarification and context for your estate planning documents, and that it serves as a guide for your loved ones after you're gone.
Example:
"The purpose of this letter is to explain some of the decisions and intentions behind my estate plan, as well as to address matters that may not be fully covered by the legal documents. I hope this will offer clarity and provide a sense of comfort during what may be a difficult time."
3. Clarify Specific Wishes
This section is where you can explain any particular wishes that may not be addressed in the will or trust documents. You might want to detail:
Distribution of sentimental items (family heirlooms, jewelry, photos, etc.)
How to handle specific assets (business interests, real estate, etc.)
Plans for funeral arrangements (burial preferences, memorial service instructions)
Guardianship preferences for minor children or pets
Any charities or causes you want to support, and how
Example:
"I wish to leave my grandmother's heirloom necklace to my daughter, Sarah. It has great sentimental value to our family. My hope is that she will continue to cherish it as a symbol of our family’s legacy."
4. Provide Practical Information
This is a good place to include any practical details your family may need, such as:
Location of key documents (will, trust, insurance policies, financial accounts, etc.)
Contact information for your estate planning attorney, financial advisor, and any other important professionals
Instructions on how to access online accounts (passwords or where to find them)
Example:
"All my estate planning documents, including my will and trust, are stored in a safe deposit box at [Bank Name]. The key is located with [Name of Trusted Person]. Additionally, my financial advisor, [Advisor Name], can be reached at [Phone Number]."
5. Explain the Rationale Behind Key Decisions
This section gives you the opportunity to provide insight into why you made certain choices. Whether it's your selection of an executor, trustee, or guardian, or specific bequests, your reasoning can help family members better understand your wishes.
Example:
"I have chosen John as the executor of my estate because of his attention to detail and his strong sense of responsibility. I trust him to make decisions that align with my values."
6. Acknowledge the Emotional Impact
Recognize that your passing will be a difficult time for your loved ones, and offer words of comfort or encouragement.
Example:
"I understand that losing me may be very hard for all of you. Please know that I love you dearly, and I want you to support one another through this difficult time."
7. Closing Remarks
Finish the letter by expressing your love, gratitude, and final thoughts. You can also mention that this letter is meant to be an additional guide, not a legal document, and refer them back to your formal estate planning documents for any legal instructions.
Example:
"Thank you for being a part of my life. I have full faith that you will take care of one another. This letter is meant to supplement the legal documents and should not be viewed as a substitute. Please refer to my official estate planning documents for any legal instructions."Sign-off:
"With all my love and best wishes,
[Your Name]"
8. Additional Tips
Keep it clear and concise: Avoid unnecessary details or confusion. Make your points clear.
Be specific: The more specific you are, the better your loved ones will be able to carry out your wishes.
Use a calm and reassuring tone: A letter of intent is a personal communication, so keep the tone warm and positive.
Life Value: Setting up a section on what life values and/or stories that drive home your wishes can be included in this or set up another short
Sample of a Short Letter of Intent:
Letter of Intent for Estate Planning
Date: [Insert Date]
Dear [Name],
I am writing this letter to explain some of the decisions I have made in my estate plan and to provide clarity on my wishes for the future. I hope this will help guide you and ease the process during a challenging time.
I have designated [Name] as the guardian for [Child’s Name] because I believe they will provide a loving and stable environment. Additionally, I would like to leave my piano to [Family Member] as it has always been something we shared, and I know they will appreciate it.
Please be sure to locate the estate documents in the safe, and refer to the instructions regarding my wishes for my funeral arrangements.
I love you all, and I know you will honor these wishes with care.
With love,
[Your Name]
By writing a letter of intent like this, you provide a roadmap for your family to follow, making your wishes as clear as possible while adding a personal touch to your estate planning.
Author:
James Hargrave, MBA, CFPⓇ, CLUⓇ