Wills and trusts will make up the bulk of your estate, specifying how, when, and in what amount your assets will be distributed. But for some, merely laying out the schematics of their asset distribution doesn’t go far enough to explain why they’ve created their estate plan in the way that they have done so. This is where a letter of intent, sometimes referred to as a letter of instruction, can come into play.
What is a letter of intent?
This document gives you the opportunity to specify the intent underlying your estate plan while providing direction as to executing and administering your estate. This information and direction can make it a lot easier for your loved ones to navigate the inheritance process, and it can give them peace of mind as they come to understand why you’ve distributed assets in a certain way. Therefore, a well thought out letter of intent should contain the following information:
- A list of all your assets.
- The location of all your assets.
- The location of your estate planning documents.
- Your login information for important accounts.
- A list of all accounts that have beneficiary designations.
- The contact information of any creditors.
- Instructions for how to care for any pets.
- How you want your final burial and funeral arrangements to play out.
- Any justifications you wish to provide for why assets are being distributed in a certain way.
- Final words to encourage your loved ones to use their inheritances as you hope.
Keep in mind that the letter of intent is meant to be directional in nature. It should not be used to replace your will or specify how assets outside of your will should be distributed, since doing so could complicate matters and force estate litigation for your loved ones to obtain clarity.
Create the holistic estate plan that you want and need
There’s a lot to consider when you engage in estate planning. And you want to ensure that you’re being as thorough as possible so that you don’t make a mistake that threatens the achievement of your goals. Therefore, take the time needed to fully assess your estate planning options so that you can make the fully informed decisions that are right for you and your loved ones.