Everyone knows they need to make a will, but another lesser-known document is equally crucial. It has no legal standing, so it can’t supersede a will, but a letter of intent (LOI), also called a letter of instruction, can be of enormous practical and emotional value to your loved ones.
At the practical level, the letter includes information your family and friends will need in order to cope if you die or for any reason become unable to act. It should list everything from the passwords to your online financial accounts to the music you want to be played at your funeral.
At the emotional level, this could well be your last message to your loved ones. Only you know what you would want to say to them.
The letter should go to your spouse, a child, a close friend or family member. A copy should go to the executor of the will.
- A letter of intent, or letter of instruction, is a more personal and detailed document than a will.
- For a start, the letter lists the practical information your loved ones will need.
- The letter may be helpful in other emergencies such as an accident or a medical crisis.
Facts to Cover
A will is read only after a person’s death. The letter of instruction may be needed in other emergencies, such as an accident or a medical crisis that leaves you unable to communicate.
In part, the letter of intent includes all of the practical information that a loved one needs in order to act in your absence. This could include:
- Passwords, PINs, and account numbers of your liquid assets, including bank, brokerage, retirement, and other investment accounts.
- Passwords for your email and social media accounts.
- Names and contact information for bankers, brokers, attorneys, and any other professionals who handle your assets.
- A list of your beneficiaries and their contact information.
- Location of titles or deeds for your home and any other real estate you own.
- The location of the keys to any safe deposit box.
- Contact information for creditors holding mortgages, credit cards, and other loans.
- Contact information for insurance coverage, especially life insurance.
- Instructions for the care of your pets.
- Informal information regarding the dispersal of assets, such as who gets a sentimental possession or an heirloom. (Your will may state that these articles are to be distributed according to the letter.)
- A list of all assets such as artwork, boats, vehicles, and jewelry as well as a rough estimate of their current value. You might include advice on where the assets can be sold such as contact details of auction houses or art dealers.
- A list of charities to receive donations.
- The specific location of your birth certificate and recent copies of all financial and Social Security statements, tax returns, and legal documents such as wills and trusts.
The letter of intent should cover everything from your financial and digital passwords and PINs to your passport number and the music you want to be played at your funeral.
What else should be included, beyond financial and logistical basics? “The document simply has some of the things that we normally may not say, but they’re important,” says Giardini-Russell. “I recall a friend’s mother-in-law passing away—and she’d been sick for months. In planning the funeral the big dilemma was, ‘What side dish would Carol have liked with the ham?’ They decided on coleslaw. The little things had the surviving family completely perplexed.
“The best part of these documents is that the person is writing it, and you don’t have to go to the attorney to have it done. It’s a supplement to a will or trust; it doesn’t replace those items, but it can put a warm and fuzzy face on the document.”
A letter of intent also preserves your voice, says Miranda, who urges everyone to create one for its emotional value as well. “They tend to be very, very personal,” she notes. “It’s the last thing a person is saying in their own words.
“We never write letters anymore. Although a letter of intent doesn’t have to be hand-written, to have something in your loved one’s handwriting is very precious.” Miranda treasures the letter of intent hand-written by her late grandfather, Paulino.
Despite how useful these letters are, few financial professionals think to mention them, says Joanne Giardini-Russell, a financial planner in Farmington Hills, Mich., who introduces the concept to clients with the term “ethical will.”
“My industry does a very poor job of talking about important items,” she says. “They’ll show pie charts all day long but not talk about the values of the person they are sitting with. They don’t like to talk about what’s important to people inside. Clients have heard the word ‘will’ and most of my clientele have a trust. I like the ethical will as a sort of overlay to the trust or will.”
Giardini-Russell often shares her own letter of intent as a template. “Client reaction is amazing. It’s such a simple thing to create and they look at me like I’m a genius,” she says.
“This is not a well-known thing,” agrees Isabel Miranda, a lawyer in Bloomfield, N.J., who specializes in trusts and estates. “In the old days, this sort of document was normal, as people would specify where they wanted to be buried,… whom to notify upon their death, and what special gifts to make. It’s a private document, as opposed to the public nature of the reading of the will.”
A Personal Note
I’ve had an LOI since my early 20s when I was single and owned few assets. But I was traveling the world, often far from home, sometimes in rough conditions and often alone. If anything happened to me, others needed to know what to do with my belongings, my dog, and even my body. Along with all of the above, mine includes my medical history, down to my blood type. It lists my driver’s license and passport number and the dates of expiration for each. I’ve also included all outstanding debt, with the amount I currently owe and the interest rate.