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When it comes to planning for the years ahead, and for after death, many people only think about creating a will.
A will is an essential document detailing how you want your assets distributed after you pass, but estate planning is a more comprehensive process. Estate planning is broader and includes communicating your final wishes and how you might manage personal and financial affairs if you become ill or lose mental capacity and can’t make your own decisions.
When creating an estate plan, it’s important to put your wishes down in your own words, to help ensure they’re carried out as you intend.
This is called a Letter of Intent.
What is a Letter of Intent?
This informal document isn’t legally binding (and doesn’t mean you don’t need a will) but it’s a helpful way to impart vital information to your loved ones and is more personal in nature than a will.
Your Letter of Intent should be attached to your estate plan.
A key difference between a Letter of Intent and a will is that you can easily update a Letter of Intent yourself, whenever any important circumstances in your life change.
An outdated document may not reflect your current wishes, so it’s ideal to review it frequently.
There’s a lot to consider when planning a funeral; location, flowers, music, and time of day are just a few decisions that must be made.
Providing input into your funeral in your Letter of Intent can reduce the burden on your loved ones at a difficult time.’
Beneficiary Contact Information
Your will may list your beneficiaries, but it’s important to include contact information for each beneficiary in your Letter of Intent. This will make it easier for your executor to contact them. Include email, cell phone, landline, and mailing address details.
Financial and Personal Information
Include instructions for accessing your financial and personal information, such as passwords for all digital platforms (ie. bank, phone and utility accounts, social media).
In adding this data to your Letter of Intent, consider:
- Where is your information stored and how do you access it?
- What are the three most important things that you want your loved ones to do when you are gone?
If possible, avoid placing physical documents in a location that’s difficult to access.
You do not get to choose when you leave this earth, but you can choose how things will be managed when you’re gone.
Focusing on principles rather than rules will make the execution and management of your estate plan easier.
For example, you might say:
- We would like our children’s education to be paid for, up to the end of their Bachelor’s degree.
- At age 30, we want to ensure each child has access to a home up to the value of $X.
- When our kids turn 21, we want them to each receive enough cash to be able to travel for XX weeks to XX.
Be clear on how you would like your assets to be handled.
For example, you may state that you would like to:
- Sell the investment property in XX location.
- Hold onto the family home – even if it’s rented out – until the kids are all 30 and have decided if they would like to keep it in the family.
- Speak to XXX about the sale of managed funds or shares
Many personal belongings are left to be distributed by the family.
If there are specific items you would like to pass down to a particular family member, you should include this information in your Letter of Intent. These can be small or large objects, from kitchenware and jewellery to paintings and furniture.
Make sure to include instructions for any objects that do not have a recipient or that you would like to be donated to charity.
A Personal Message
A Letter of Intent is not just a logistical document, it’s also a message to loved ones.
Personalised messages to friends and family members allow it to function as a final message providing guidance and support. It’s also an opportunity to share life lessons, beloved moments, and wishes for the future.
A Final Word
Understanding what to include in a Letter of Intent can help ease the process of estate planning. Along with a will, it provides clarity to loved ones and serves as a lasting keepsake for future generations.
If you need help with estate planning, feel free to contact the Rising Tide Team for a chat.