Let’s say you’ve recently completed or reviewed your estate planning documents – will, trust (if appropriate), powers of attorney for finances and medical decisions, and advance directives for your care – and updated the designated beneficiaries of your life insurance, retirement accounts, perhaps even your house and car. So many decisions. Toast yourself and the effort it took to get to this point!
You may be relieved and are undoubtedly happy to have the process complete, at least as far as you know. Your advisors have been notified and given copies of your updates and, hopefully, those with roles in your plan have given their approval and you’ve made copies of the document granting them their designated power and passed it along to them.
Are you done? Well, maybe. What else is there?
Letter of Instruction
I recently read an article suggesting the addition of a “Letter of Instruction” to complement your estate plan. What is it and what might it include?
” A letter of instruction is an informal letter to an executor, personal representative, and/or other family members that provides important information about your assets and final wishes after death. This letter provides supplemental information not included in a will, revocable trust, or other estate planning documents. Although this letter is not legally binding, it can make administering an estate much easier and more efficient for grieving family members.
“This letter can also be changed over time as personal information and circumstances change without the need to contact an attorney. A letter of instruction should not contradict any information in estate planning documents; however, it can include additional details about the directions included in an estate plan.”[i]
Information About Your Assets
Perhaps your financial advisor provided a notebook in which you may reference your important documents and tell your executor or personal representative where to find information they will need to manage the distribution of assets in your estate. I bought a loose-leaf binder, created tabs, and put copies of my documents there. I included a summary of my personal information – where I was born and lived, where I went to college, and the names of my immediate family, for example. I also included a list of my doctors and prescriptions.
The tabs of my binder and what is included in each follow:
- Tax Planning – the name of my accountant and where my tax records can be found.
- Retirement Planning – the latest update for my pension and Social Security.
- Cash Flow Planning – credit and debit card and checking account information.
- Risk Management – home, auto, long-term care, and health insurance information along with the names and phone numbers of my agents.
- Estate Planning – copies of my estate planning documents and recorded beneficiary deeds, as well as contact information for my attorney. If you have burial or cremation instructions or prepaid plans, include copies of those.
- Investment Planning – a list of my investment accounts, including 529 College Savings accounts for my grandchildren, and the beneficiaries of each. Contact information for my financial advisor who can assist with the distribution process. Timelines for retirement plan asset distribution and penalties that may arise if they are not done in a timely manner.
- Other – information about my LLCs and time share. A list of where to find keys and where other important information is stored.
Does this give you some ideas? The format is not the key – binder, letter, or something you design. It does not need to be fancy, but your executor, personal representative, or family member will have an easier time if this information is readily available. In fact, I sat down with my son and my partner and shared all the above information with them. Although some of it may change between now and my death, I am comforted that they know what to expect and know where to look for instructions and contacts.
Other Final Wishes
Perhaps you have specific instructions for the treatment of your pets. Do they like certain foods? What is their routine? What environment do you want for them? How do they respond best to commands? If the details of the care of your animal companion(s) are important to you, doesn’t it make sense to pass them along?
My parents wrote specific instructions for their respective funerals – preferred minister, beloved songs, scripture that was special, burial details, etc. My father died in Arizona while my mom and dad were on vacation visiting our family, but services were to be in southern Minnesota where they lived. My mom, my oldest sister, my husband, my two sons, and I boarded a plane to Minneapolis with a further connection to Rochester, Minnesota.
We arrived in the Twin Cities in the middle of a massive blizzard. Our flight to Rochester was cancelled and, looking out the windows of the terminal, almost no traffic moved at all. We ended up staying overnight in a nearby hotel and flew to Rochester the next day. Not everyone who wanted to attend my dad’s service could get to Minnesota. However, we followed my dad’s wishes for his service as much as possible. It was special to us, and especially to my mother, to have a plan at this stressful time. It was comforting.
Action
Good idea, you say, but I can do that when I have more time. Having been through the grieving process after the death of my parents and my partners’ father, I can tell you that paperwork adds to the stress on those left behind. Hunting for documents and the names of professional contacts and advisors took time. Why not plan to make it easier on your family? Do it now! They will thank you!
Beverly J Bowers, CFP®
