Despite the abundant tools available to help you with your estate plan, you may find that you have pertinent, even crucial, information that applies to your estate plan, yet does not fit anywhere in your existing plan. If you feel the need to include such information in your estate plan but have nowhere practical to include it, including an explanatory letter in your estate planning documents may be the solution. With that in mind, a Grand Forks estate planning attorney at German Law explains how an explanatory letter can help your estate plan succeed.
Is Something Missing in Your Estate Plan?
The average estate plan will include several common documents. For example, a Last Will and Testament typically serves as the foundation of an estate plan, allowing you to appoint an Executor for your estate, gift assets, and nominate a Guardian for minor children. It cannot, however, explain why you did not gift your estate equally to your children nor why you appointed a sibling, instead of a spouse, as the Executor. You might also include a trust, which can help achieve a variety of goals, and into which you will transfer assets. A trust agreement, however, is not the best place to leave detailed instructions about the upkeep of those assets or why you decided to pass down those assets in staggered disbursements. An advance directive can specifically grant an Agent the ability to make healthcare decisions for you if you cannot make them yourself and lets you make certain healthcare decisions yourself ahead of time. It cannot explain the reason why you made those decisions though. A Letter of Instruction can help fill in all those missing pieces.
What Is an Explanatory Letter?
An explanatory letter, also referred to as a “Letter of Instruction,” is a document that you may include in your estate plan that provides instructions not found elsewhere in your plan. A Letter of Instruction, however, can also be used for other similar purposes. Anything you choose to include in your Letter of Instruction is not legally binding on anyone; however, the information you include can be crucial to your overall plan. Some common uses for a Letter of Instruction include:
- Provide the location of important estate planning documents, such as your Will, life insurance policies, or a trust agreement.
- Provide a summary of all assets you own along with account numbers and/or online log in instructions to access the accounts.
- Names and contact information for people that need to be contacted after your death.
- Instructions for maintaining assets. This could be as simple as how to winterize your vacation cottage or how to value your rare coin collection.
- Explanations for controversial decisions you made within your estate plan. For example, if you gave a large donation to charity or disinherited a child, this is your opportunity to explain why you did what you did.
- Express your wishes about your funeral and burial. Ideally, you included a funeral component in your estate plan; however, you may wish to add details to ensure that your wishes are honored.
How Does an Explanatory Letter fit into Your Estate Plan?
Although the instructions you include in a Letter of Instruction are not legally binding, they can go a long way toward assisting with the probate of your estate and can help prevent litigation. Anything you can do to make your Executor’s job easier will ultimately benefit your loved ones. Moreover, if any of the terms of your estate plan are likely to cause conflict or animosity, explaining why you included those terms can deter litigation, or assist your Executor to defend your wishes if litigation cannot be avoided.
Contact Grand Forks Estate Planning Attorney
Please join us for an upcoming FREE seminar. If you have additional questions or concerns about how to incorporate an explanatory letter into your estate plan, contact the Grand Forks estate planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.
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