A letter of instruction (LOI) is an important part of any comprehensive estate plan, whether you’re just starting out or have a plan already in place. A letter of instruction can help your loved ones manage important information about you. A LOI conveys your desires, includes practical information about where to find various items referenced in your plan, and it can provide advice to help those you designate in managing your affairs.
Even with a new or updated estate plan, there exists a lot of information that your heirs need to know that doesn’t necessarily fit into the format of a will, trust, or other estate plan components. In the absence of this information, it is easy for those in charge to miss important items and alternatively become overwhelmed, sifting through all of the documents you left behind. All LOI’s are as different as the persons who wrote them; however, there are some standard data that every LOI should include:
- A current list of people and their contact information to inform of your death
- A list of beneficiaries of your estate plan
- The locations of important documents like your will, trust, financial statements, insurance policies, deeds, and birth certificate
- A comprehensive list of assets such as bank accounts, investment accounts, real estate holdings, insurance policies, and military benefits if applicable
- PINs, usernames, and passwords for debit cards and online accounts
- Usernames and passwords for social media accounts, music or information accounts
- Keys and combinations to digital safes, strong boxes, and safety deposit boxes and their locations
- A list of credit card accounts and any other debts
- A list of organizations in which you belong or are a paying member such as professional organizations, boards, country or golf clubs, social or political clubs, and more
- A current list of contact information for lawyers, brokers, tax preparers, financial planners, and insurance agents
- Instructions for the distribution of personal items with sentimental value
- Instructions for a memorial or funeral service
- A personal message to family members
A note about your digital footprint: your digital world often includes music libraries, storefronts, YouTube channels, influencer social media accounts, etc. When most of us create these accounts, we blithely accepted the End User License Agreement (EULA) without much thought about when we are no longer around to manage its content and activity. A EULA designates the rights and restrictions that apply when using the software known as terms of service (TOS). Naming someone capable of managing your digital assets and their activity is important. Most of your online accounts are not subject to typical estate planning devices like trusts and wills because they are not technically your property. Since most TOS are non-transferable, you will be unable to transfer your online accounts’ ownership legally. However, you can still make a plan for how they are handled when you die.
Once you write your letter, put it somewhere easily accessible and tell your family about it. If you do not want anyone to read the LOI until your death, seal it in an envelope. You should review your letter once a year to be sure it reflects your most current wishes and information. Because your heirs read your letter of intent upon your death, it can be difficult for you to write and have any degree of satisfaction. The final words and conveyances are sobering.
We can help you compose such a letter (as well as other estate planning documents), making sure that it complements and does not contradict your estate plan. Remember that your LOI can bring real peace and be a source of comfort to your grieving family members. It allows them time to contemplate and connect with others to celebrate you rather than sort through documents searching for important papers. Your LOI can also alleviate potential family conflicts and stress because you specifically address personal items’ distribution. Your goal should be to ease the burden for those in charge and gain a sense of peace that you have done all you can to allow your loved ones to focus on reflecting on your life.
When you are ready to take the next step, we will be here to help. If you need assistance or would like to talk about your specific situation, contact our Cincinnati office at (513) 815-7006.
- I don’t own much and neither does my family. Can’t we delay estate planning until we can afford it?
You shouldn’t. It is crucial to give legal authority to a person of your choice, to care for your children if anything should happen to you. You don’t want your children to become wards of the court, or to be delivered to a family member you don’t like. Second, the cost to you at the front end (now) is much less than it could be later when you might face steep legal fees to get the job done. We’re all in favor of lawyers earning a living. We just never want any of our clients to have to pay for costs that are unnecessary or avoidable.
- My son just graduated from high school. He owns nothing but an autographed baseball and a 1997 Chevy pickup. Surely I don’t have to worry about an estate plan for him?
You should. Estate planning isn’t just about owning property. Life needs protecting, too. If your child should lose consciousness in an accident, and he or she is over the age of 18, you as a parent will no longer have the legal authority to decide what medical treatment he should receive. Insurance companies might refuse to deal with you.
Just imagine the stress of it. You’d be there to help, but nobody would be legally required to listen to you. You would have to go to court and get a guardianship – over your own child.
Instead, just think how much easier (and less expensive) it would be to get your adult child to come in to see us, while all is OK now, to make out powers of attorney. Those are documents that convey legal authority onto you, or on people of your adult child’s choice, to act on your child’s behalf if he or she becomes unable.
- Our kids are grown and married. Can’t my spouse and I postpone planning?
You shouldn’t. First, you can never tell when disaster might strike. Second, your kids may seem happily married now, but there’s no telling how long for – and you don’t want to see their, and possibly your, money and property lost in bitter divorce proceedings or lawsuits or bankruptcies.
- Our kids are able-bodied, thank goodness. Why should we worry about protecting disability benefits for them if they don’t need them?
They might not need those benefits now. But if they become disabled in the future, and if they inherit money from you, inherited money could cost them thousands of dollars a year in benefits.
- My doctors know best. I’m not going to tell them how to do their jobs, and I don’t want anyone else doing that either. What’s wrong with that?
Do you want to be kept alive on machines, possibly for years, when you no longer can care for yourself, recognize loved ones, converse, or even swallow? These days, medical machines can breathe for you through a tube in your throat, keep your heart beating, and deliver food and fluids through a tube in your stomach. Many who are on these machines die in the hospital, their arms tied down to prevent dislodging the tubes. Health-care providers are ethically obligated to keep you alive to the bitter end. Few of us want that. You can decline those extreme measures with our carefully crafted legal documents.
- Can’t I just grab a will of the internet, do a transfer-on-death deed for my land, put my kids on my bank account, and call it done?
Just look at some of the complications, in the above answers. An estate plan should protect disabled children’s inheritances from the loss of valuable government benefits. It should avoid probate court. It should protect money from creditors or divorce or remarriage. It should avoid disputes between children as joint owners.
Even a relatively simple situation contains many moving parts. It takes expertise to coordinate the various strategies. Don’t risk a result you wouldn’t want. Call us to create a plan that harmonizes the moving parts, so the gears will work together and you will leave the legacy you intended.
- Can’t I just forget the whole thing and let my kids deal with it after I’m gone?
Sure you can. But your kids will not thank you for leaving a disorganized mess behind, and that may be how they remember you.
Here’s one good idea:
Come see us now. The documents we create for you might be “just pieces of paper,” but they are worth a great deal more than that. At a stressful time when additional hurdles are the last thing you need, powers of attorney and other estate-planning options could save you and your family delay, expense, and heartache. If you need assistance or would like to talk about your specific situation, contact our Cincinnati office at (513) 815-7006.
During your lifetime, you spend the first part trying to attain financial security and the second part working to maintain it. This adage is why many people spend substantial time and effort maximizing their legacy goals in their estate plan, ensuring their wishes come to pass. Your life’s work and ability to provide for your family provide a gratifying feeling for you and your heirs. However, your careful planning can go awry when last-minute changes become part of the mix, often guided by advice from well-meaning family and friends but not a professional estate planning attorney.
Here are five common mistakes that people make that will upend your estate planning:
- Leaving money to someone while you are alive but not changing your will. Frequently people include cash gifts in their will. For instance, a favorite nephew may inherit $50,000, a childhood friend $100,000, even a housekeeper may receive $10,000 for loyal service. It is quite common when family members meet after a loved one has passed to hear that the deceased has already gifted these particular cash amounts. The mistake is that the gift is given, yet your will continues to reflect the named individual should be given what has already been received. In the absence of an updated will reflecting the gift, the probate process will still award the individual named the cash amount or, in essence, an additional gift. While some recipients will approach the gift during their lifetime as an advancement on inheritance, others may not agree, and the argument may wind up in court.
- Insufficient assets are funding your trust. You may have created your trust years ago, and its assets may have decreased in value and be insufficient to cover the costs of all the gifts associated with your trust. Your good intentions in creating the trust can evaporate, leaving some inheritors short-changed or receiving nothing at all without proper management and preservation of the trust’s assets. It is good to remember the rule that cash gifts get paid first. For example, if you leave your sister one million dollars and the rest in trust to your children, and you die with assets totaling $1,100,000, your sister will receive her cash outright while only $100,000 will remain in trust for your children. If there is no cash to fund the trust, the trust provisions are zero-sum, and the unlucky heir will have to learn of the unfortunate circumstances.
- All assets do not pass through your will. Your estate division is primarily likely to be probate and non-probate assets. Just because you believe your assets’ aggregate is enough to satisfy your gifting, not all assets will pass through the will. You must understand the difference between probate and non-probate assets. Non-probate assets often pass as a beneficiary designation or joint ownership outside of a will. Also, consider the need to deduct any outstanding debts, expenses, and taxes in the valuation of your assets.
- You are adding a joint owner of accounts or real estate. Joint ownership seems a simple solution bypassing excessive planning; however, adding a joint owner can create serious problems. Yes, the bank account or piece of real estate will quickly become wholly owned by the survivor, and yet if your will is reliant on that asset to pay other inheritors, debts, expenses, or taxes, there may be a cascade of problems after you die. Adding a joint owner will often lead to will contests and even prolonged court battles, so be sure your estate planning attorney agrees that the option of joint ownership is a sound one in your particular situation.
- Changes to your beneficiary designations. If you make changes to your beneficiaries without speaking to your estate planning attorney, you can create all sorts of unintended results. This situation is particularly true in the case of life insurance. For instance, the policy can pay your trust in order to meet bequests, shelter money from estate taxes, or pay those taxes. However, if you change the beneficiary, you will have to designate the money elsewhere to cover the existing bequests and estate taxes. In another case, if you have a retirement account payable to an individual inheritor but you change the beneficiary to your trust, you may create adverse income tax consequences.
These are just five of the more commonplace mistakes that can occur in your estate plan. Sadly, there are many others, and so caution and professional legal advice are crucial. While it is essential to review your estate planning documents regularly and perhaps make changes, it is imperative to do so under the advice of your attorney. What may seem like a harmless amendment or change may create unintended tax consequences, cut someone out of receiving an inheritance, or worse yet, set into motion a lengthy court battle that harms family relationships.
Reviewing your estate planning documents with your attorney will ensure that your desired changes will address your new need without negatively impacting your overall intentions. If you need assistance or would like to talk about your specific situation, contact our Cincinnati office at (513) 815-7006.
When a family member has passed, the family occasionally ends up arguing over personal property. Arguments can take place over things like a coffee mug, a piece of jewelry, or a painting. These types of arguments can be eliminated by filling out a personal property memorandum and keeping it with your will or trust.
A personal property memorandum is designed to cover who should receive items owned that don’t have an official title record. Personal property includes furniture, jewelry, art, and other collections, as well as household items like china and silverware. Personal property memoranda may not include real estate or business interests, money and bank accounts, stocks or bonds, copyrights, and IOUs.
When writing your memorandum, it is best to keep things simple. Personal property memoranda generally resemble a list of items with the attached names of the inheritors. It can be handwritten or typed but should always be signed and dated.
All items should contain sufficient detail so that argument and confusion can be avoided. Complete contact information including address, phone, email, and a backup contact if possible should be included. Do not include items that you have already explicitly left in your will or trust.
The beauty of a separate list of personal items and their planned distribution is that if you later decide to change who receives what, you simply update your current list, or replace the list altogether. You can destroy an old record or maintain signature and dates on each of your personal property memoranda so that it is easy to identify your most current set of wishes.
A personal property memorandum for your tangible personal effects is a simple way to address how you want your personal property to be distributed. We would be happy to help you create a legal personal property memorandum along with any other estate planning documents you may need. If you need assistance or would like to talk about your specific situation, contact our Cincinnati office at (513) 815-7006.