A letter of intent (LOI) provides additional instructions to heirs and estate administrators.
When most people think of estate planning, they think of last wills, powers of attorney, and trusts.
These are key for providing legally binding instructions for your wishes regarding healthcare and financial matters during incapacity or after death.
Estate planning and incapacity planning documents often fall short of giving your loved ones an understanding of your values and personal views.
Letters of instruction (LOI) are not legally binding, but they benefit loved ones and estate administrators by knowing the reasoning behind your choices and your hopes for their future.
A letter of intent adds a personal touch to estate planning.
A letter of intent is used in conjunction with your estate planning documents.
Its purpose is to give personalized guidance to your trustees, executors, and family members.
While a last will and testament delineates legal directives, a letter of intent allows you to communicate specific wishes and instructions.
Because letters of intent are personalized, their content often varies.
In short, there is no one-size-fits-all approach.
Common points people include in these documents are personal messages for loved ones, preferences for funerals and burials, explanations for the reasons behind estate planning decisions, instructions on caring for pets, and guidance on handling heirlooms or other sentimental items.
Including a letter to address these aspects of your planning can prevent confusion and related complications during a stressful and emotional time.
Although trusts and wills are essential for legally valid distribution of assets according to your wishes, they often leave loved ones with no answers about why you made these estate planning decisions.
If some heirs receive less than others, they may inaccurately assume it to be a personal slight.
With a letter of instruction, you can share the logic behind your choices and better support family unity.
A letter of instruction can also be a place for you to outline wishes for family traditions and meaningful information like family stories or recipes.
Although letters of intent vary, they should include specific elements to make them more effective at accomplishing your goals.
What should be included?
Personal Messages.
You can share lessons you have learned, your values, and your thoughts in your own words.
Imparting such wisdom to your friends and family can benefit them for generations.
Asset Distribution Explanations.
You had reasons for dividing assets as outlined in your estate plan.
Clarifying the purpose of your decisions can minimize the chances of hurt feelings and family conflict.
Funeral and Burial Instructions.
You likely have preferences or plans for your final resting place and funeral service.
A letter of intent is an optimal place to share your wishes for cremation, burial, services, and payment.
Heirloom Details.
While some items in your home have little monetary value, they hold significant meaning for you and your family members.
You can record the stories of these items and give directions for their transfer and care.
Pet Care Plans.
If you have pets, you likely would prefer they live with someone you know and trust rather than being sent to a shelter.
You can select a caretaker, give instructions, and share about funds set aside for the care of your pet in your letter of instruction.
In addition to these areas, you should include contact information for your financial advisor, executor, and estate planning attorney to ensure your loved ones have this knowledge.
Be Clear and Concise
Although letters of instruction are more informal, they should still be clear.
You should use simple and specific language to convey your wishes.
Align with Legal Documents
Your letter of intent should supplement your last will or trust.
This means they should be in alignment.
Avoid putting any contradictory information in your letter that might confuse your heirs or estate administrators.
Update Regularly
Marriages, divorces, birth of children, changing jobs, and selling or purchasing new assets can all impact your estate planning terms and goals.
It is essential to review and update your estate plan regularly.
When you revise your estate plan, you should also update your letters of instruction so they continue to align.
Store It Securely
Your estate plan and letter of intent should be stored in a secure yet accessible location.
Your family members, trustee, or executor must retrieve these to administer your estate according to your wishes.
Letters of intent have a limited scope of authority because they are not legally binding or enforceable.
You cannot simply have letters of intent and then call your estate plan complete.
They work as part of a comprehensive plan with legal documents in place.
To create a comprehensive estate plan in alignment with your priorities, relationships, and logistical needs, you should work with an experienced estate planning attorney.
Although a letter of intent can convey the personal meaning behind your wishes, you must have valid legal documents for your wishes to be accepted by the courts.
If you are looking for an experienced estate planning attorney to create a comprehensive plan to meet your needs and give you peace of mind, you can request a consultation with Harvest Law KC in Overland Park, Kansas.
Letters of intent allow you to express more details about your estate planning decisions while giving personal direction to executors and heirs.
Although all letters of intent are not identical, people typically include directions for funerals, pet care instructions, asset distribution explanations, and other personal messages.
Whatever you choose to include in your letter of intent should accurately reflect your wishes in your estate planning documents.
Because letters of intent have no legal authority, you must have a last will and testament or trust to distribute assets to heirs according to your wishes.
By storing letters of intent with your legal estate planning documents, your loved ones and administrators will be able to access them all when necessary.
This post is for informational purposes only and does not provide legal advice. You should contact an attorney for advice concerning any particular issue or problem. Nothing herein creates an attorney-client relationship between Harvest Law KC and the reader.
Reference: Investopedia (Feb. 20, 2021) “What Is a Letter of Instruction?”
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