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Estate Plan - Senior man setting up a letter of intent

Does your estate plan include a letter of intent?

by Kelly Gicale | Contributor
December 20, 2021

You've just finished completing your estate plans with your attorney. Your will, trust and other important legal documents are in place, and it feels as though a weight has been lifted. You've taken the actions needed to give you peace of mind and ensure that your wishes are legally documented, but there's still one additional step you should consider taking to make sure that the message you're leaving for your loved ones is exactly what you intend.

Though the legal documents you have in place contain the language and directives needed to carry out your plans, you likely want to consider writing one last document to include in your binder of estate planning documents: a letter of intent.

What is a letter of intent?

A letter of intent is a non-binding, non-legal document that you can use to express what you wish to occur with your estate in your own words.

While the terms of your legal documents will ultimately control your asset management and distribution, a letter of intent can give you an opportunity to explain what your motivations were for your decisions and also provide greater insight that may help to avoid any potential misunderstandings or confusion about your plans after your lifetime.

In other words, a letter of intent is a way to leave behind instructions regarding the distribution of your assets in plain English instead of the formal legalese of your controlling documents. In that way, it provides you with even greater control over the ultimate outcome, regardless of what happens in the future. It's also an opportunity to communicate your heartfelt and emotional goals for your assets, which can be completely lost in the dry, technical language of legal documents.

Why should I write a letter of intent?

A letter of intent can be invaluable for communicating your plans with your beneficiaries and other loved ones in a way that would not be possible through your legally controlling documents. The following are some of the major benefits of including a letter of intent with your estate plans.

You can clarify your intentions

When crafting your estate plans with the assistance of an experienced Legacy Plan Network Attorney, you'll have a clear idea as to what you want to happen with your various assets. You envision leaving your home to your wife for her to live in as long as she can do so safely on her own. You imagine leaving your lake house to your children to use together with their families as they grow older together. You think about the trust you created providing lifetime resources to enhance the government benefits your son with special needs receives, giving him a more enriched life.

While these visions come to fruition through the legal documents your attorney prepares, the nuances of your plans in each of these circumstances cannot be captured by the required legal language. As there is little flexibility and there are strict legal limitations as to what you can include in an instrument like a trust, a letter of intent can be very useful for explaining exactly what you wish to happen in the future.

You can explain your motivations

Legal documents can be extremely rigid, and legalese can be difficult for most people to understand. As a result, your will, trust and other estate planning documents are not going to be the best way for your family and friends to understand not only what you wish to happen, but also why you decided to distribute your assets in that way.

With a letter of intent, on the other hand, you have freedom to write whatever you wish about your estate plans and the reasons why you structured it in the way that you chose. This can be especially useful when your plan contains directions that might be considered controversial by any of your beneficiaries.

For example, you might decide to disinherit an adult child because they have a substance abuse problem. This could be extremely problematic for your legacy and the lasting relationship with them absent a heartfelt letter about your desire to protect them. Or, if you restrict trust distributions to only be used to pay for expenses such as education, a home or business, then you can explain through your letter of intent why it was important to you that an inheritance be used for these reasons.

You can give additional guidance for people with authority over your assets

If the personal representative for your will or successor trustee for your trust ends up in a position where your legal documents don't cover a particular unexpected contingency, then a letter of intent could be the difference between ensuring that your plans are carried out and having your assets be used in a way you never intended.

Even the most thorough estate planning documents cannot possibly cover every single circumstance that may arise. By writing a letter of intent where you explain your hopes for your assets, you can give your successor trustee or personal representative guidance that could be invaluable for choosing between options and trying to discern which you would have chosen for yourself. As legal documents generally contain specific, formulaic language that's required to be legally enforceable, it's unlikely that you will be able to provide this kind of added information should it be needed in the future.

Your estate plans are less likely to be challenged

With a letter of intent, you can elaborate on the plans contained in your legal estate documents in a way that reinforces your decisions and dissuades any of your beneficiaries or other loved ones from challenging the distribution after your lifetime.

Letter of intent - Senior couple looking at their son thinking

While a letter of intent is not a legal document and therefore should not be relied upon as evidence of your wishes, it can be useful to help ensure your family and friends understand that you made your estate planning decisions with a sound mind and with good reasons. By writing a letter of intent, you have the opportunity to reassure your loved ones that the decisions you made were your own, and that you gave a lot of thought before deciding upon your asset distribution.

While it's not a fail-safe way of avoiding a will or trust contest, a letter of intent may help to prevent any beneficiary or family member who might not be pleased with your decisions to understand that they were made deliberately. With that knowledge, they could be less likely to pursue legal action to try and change your intended asset distribution.

Your charitable intentions can be documented

Again, though not legally enforceable, a letter of intent can be used to document your wishes for any charitable gifts that you include in your estate plans, and it can inform your family members as to why the particular mission or organization is important to you.

When you leave a gift in your will or trust to a charitable beneficiary, you may not have included any information in your legal documents as to how you wish for your gift to be used. With a letter of intent, you have more freedom and flexibility to provide exactly what program or purpose you want your gift to be directed toward. When you use a letter of intent in this way, it will be essential to send a copy to the charitable organization during your lifetime to ensure that your gift can be used in the way that you intend.

A letter of intent can also be extremely useful for sharing your passion for a specific cause with your loved ones. The language creating a charitable gift in your will or trust will likely be very straightforward and to the point, so it will not communicate the reason why the organization's mission means so much to you. However, with a letter of intent, you can share with your loved ones what the cause means to you, or why charitable giving overall is important. In this way, you can share your values with your family and friends in a way that you might not have been able to during regular day-to-day conversations.

What are the benefits of writing a letter of intent?

Although not legally enforceable, a letter of intent can offer many different benefits for anyone planning their estate, regardless of the specifics of their estate plans or the circumstances of their family.

You can communicate in your own words

Legal documents like a will or trust are made up of complicated legalese that can rarely, if ever, capture the full picture of your wishes for the future. In addition to containing technical jargon, these are often very direct, dry and emotionless. As a result, the feeling behind your gifts to your loved ones can be completely lost if they only have your estate planning documents to turn to.

With a letter of intent, however, you can use your own words to communicate your intentions, plans and desires for your assets and for the role they will play in your loved ones' lives. You have the freedom to write as little or as much as you wish, and you can share as much or as little as you like. It's completely based on your discretion, and it allows you to control the narrative about your distribution and the legacy you want to create with it.

You can prevent confusion and potential strife

By having the opportunity to clearly communicate to your loved ones, you can head off of any potential intra-family conflict. In sharing your motivations behind the decisions you made in your estate plans, you can bring your family and friends into your thought process so that there's no question that the instructions you provided in your legal documents are exactly as you wish.

This does not guarantee that your loved ones will not contest your will or trust, and a letter of intent is not a legal document that would carry primary weight should that kind of legal action arise, but it could help to create more harmony between your family and potentially prevent in-fighting after your lifetime. Similarly, it could help ensure that no one family member, beneficiary, personal representative, or successor trustee is confused about your decisions or your intentions.

You can write it at any time

Unlike your formal legal documents, which generally must be created by an experienced attorney, you can prepare your letter of intent at any time. Ideally, you would want to write it as soon as possible after completing your legal documents to ensure that they are all up-to-date and available and stored together. However, you can also take your time when you do sit down to create it, using the opportunity to reflect upon your choices and send a heartfelt message to your loved ones. It's a letter that they will likely keep and cherish for years to come, so you want to be sure that your words accurately reflect both your intentions in case the letter is needed to confirm logistical or administrative decisions while also communicating your love and appreciation for your family and friends.

You can change it at any time

While you can update your will with a codicil and your trust with an amendment, those changes generally involve the time and expense of working with your estate planning attorney. It's recommended that you take time to review and update formal estate documents at least every five years, and more often when you experience a major life change like a divorce, serious illness or move.

However, with your letter of intent, you can choose to update it at any time without having to consult anyone else. It's your personal letter to your loved ones, so as time goes on, you may wish to adjust your words or include a special message to someone based on life experiences. Although you can edit or re-write your letter whenever you wish, it's important to make sure that your latest version is stored with your formal estate planning documents to avoid having an earlier draft left for your beneficiaries.

You can control your legacy

Overall, one of the greatest benefits of a letter of intent is the control it provides you. When you write a letter of intent, you have the chance to write your own life story. You are offering tangible help for questions that may arise as to your asset distribution, but a letter of this nature is so much more than that. It's a way to express to your loved ones how important they are to you, and why you wish to convey that by leaving them a specific asset or general gift from your estate. It also gives you the opportunity to make your last words ones that are carefully chosen while you are of sound mind. Without a letter of intent, our last conversations or messages to our family members and friends are often not our choice, because we do not know that they will be the last. A letter of intent gives you the power to make that decision for yourself, and with a great deal of care and consideration.

Why it's especially important to include a letter of intent with a trust

If you created or are considering a trust for your estate plans, then it's likely even more advantageous for you to consider writing a letter of intent to include with your trust instrument.

Trusts are established for many different reasons, such as protecting an inheritance from being pursued by creditors or lost in a divorce, reducing estate taxes, preserving eligibility for government benefits and providing for the well-being and happiness of your beneficiaries.

These goals are often addressed by providing discretion to the successor trustee, or the person who will manage your assets held by the trust after your lifetime. The usual standard for that discretion is providing your successor trustee with the ability to take distributions for the “health, education, maintenance and support of the beneficiary.” These are the “magic” legal words that provide asset protection and offer other benefits to the trust's assets and beneficiaries.

You likely have a good idea as to what should be included in that standard and how you'd like your estate's assets used. The actual text of your trust, however, is unlikely to communicate those wishes given its formal legalese.

As a result, a letter of intent can be of great value to your successor trustee in implementing your intent taking into account the nuances of your preferences without having to guess.

Plus, as mentioned, your instructions can reduce family strife about asset management and distribution since your successor trustee will be following the instructions you clearly stated in your letter of intent.

How do I create an estate plan?

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life's contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

This article is published by Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at legacyassuranceplan.com.

Phone - 844.445.3422
Email - info@legacyassuranceplan.com
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