An estate plan typically includes formal documents, such as a will, trust, and powers of attorney. While these tools outline legal and financial directives, they may not convey the personal nuances of your wishes. A letter of intent (LOI) bridges this gap, offering an opportunity to share additional instructions, values and preferences that may not fit within the constraints of formal legal documents. Using a letter of intent for your estate plan ensures that your wishes are respected, according to Jayson Lenox, Partner and Attorney at Law with Beck, Lenox & Stolzer.
Although not legally binding, a letter of intent is invaluable for your heirs and the individuals responsible for your estate plan. It ensures that your legacy extends beyond the distribution of assets to reflect your priorities and values.
What Is a Letter of Intent?
A letter of intent is a written document that supplements your estate plan by providing specific guidance to your family, executors, or trustees. Unlike a will, which focuses on legal directives, an LOI offers flexibility to communicate personal instructions and wishes.
The content of a letter of intent varies but often includes:
- Detailed explanations for decisions made in the will or trust.
- Personal messages to loved ones.
- Funeral and burial preferences.
- Guidance on the care of pets.
- Instructions for handling sentimental items or heirlooms.
A letter of intent addresses these details, reducing ambiguity, preventing misunderstandings and reassuring your family during a challenging time.
Why a Letter of Intent Matters
Legal documents, like wills and trusts, ensure that your assets are distributed according to your wishes. However, they may leave unanswered questions about the reasoning behind your decisions. For example, an heir may feel hurt if they receive a smaller inheritance than expected. An LOI allows you to explain your reasoning, preserving family harmony and minimizing the likelihood of disputes.
An LOI can also serve as a roadmap for non-legal aspects of your estate. For instance, it can outline how you wish family traditions to continue, provide recipes or stories tied to heirlooms, or specify the disposition of items with sentimental value not mentioned in the will.
Key Components of a Letter of Intent
While there is no strict format for an LOI, certain elements should be included to ensure its usefulness:
- Personal Messages: Share thoughts, values, or lessons you wish to impart to your loved ones.
- Asset Distribution Explanations: Clarify the reasoning behind your decisions to minimize confusion or resentment.
- Funeral and Burial Instructions: Specify preferences for services, burial or cremation and associated expenses.
- Heirloom Details: Provide context for sentimental items and instructions for their care or transfer.
- Pet Care Plans: Include specific directions for pet care, such as naming a caretaker or setting aside funds for their needs.
An LOI can also include practical details, such as contact information for your attorney, financial advisor, or executor, ensuring that all parties are informed and aligned.
Drafting an Effective Letter of Intent
Be Clear and Concise
While the LOI does not need to follow legal formalities, clarity is key. Use simple language to convey your wishes and avoid ambiguous terms that may lead to confusion.
Aligning with Legal Documents
Your LOI should complement, not contradict, your will or trust. Any conflicts between the LOI and legally binding documents can create confusion for your executor or heirs.
Update Regularly
Life events, such as marriage, divorce, the birth of a child, or the acquisition of new assets, may require updates to your LOI. Regularly revisiting the document ensures that it remains relevant and reflects your current wishes.
Store It Securely
Ensure that your LOI is accessible to the executor, trustee, or family members who will need it. Store it alongside your estate plan and inform trusted individuals of its location.
The Limitations of a Letter of Intent
While an LOI provides invaluable guidance, it is not a legally enforceable document. Using a letter of intent for your estate plan aims to clarify and supplement it, not replace formal legal instruments. Working with an estate planning lawyer ensures that the legal framework of your plan is sound, while the LOI adds a personal touch to your directives.
Crafting a Legacy That Reflects Your Values
An estate plan is more than a legal necessity—it reflects your life, priorities, and relationships. A letter of intent adds depth to your plan by addressing personal and sentimental matters, offering guidance to your loved ones and ensuring that your wishes are fully understood. Taking the time to craft an LOI and build a strong estate plan with our firm will secure your peace of mind and your legacy.
Key Takeaways
- Express Wishes: A letter of intent supplements legal documents by providing personal guidance and instructions to heirs and executors.
- LOI Content: Common inclusions are explanations for asset distribution, funeral preferences, care for pets and personal messages.
- Coordinate with Legal Documents: Aligning the LOI with legal documents and updating it regularly ensures its relevance and effectiveness.
- LOI is Not Legally Binding: While not legally binding, an LOI reduces ambiguity, minimizes disputes and preserves family harmony.
- Responsible Storage: Storing the LOI securely alongside legal documents ensures that it is accessible when needed.
If you are not currently a client of Beck, Lenox & Stolzer and have questions about your estate planning documents, or creating a letter of intent for your plan, schedule a complimentary phone consultation with attorneys, Mr. Lenox or Mrs. Stolzer.
Reference: Investopedia (Feb. 20, 2021) “What Is a Letter of Instruction?”
