Even people who pay attorneys to draft their estate-plan documents often forget to include letters of instruction. These informal documents provide guidance to the executor of your will, agents named in your powers of attorney, trustees, etc. It’s actually better to draft letters of instruction on your own (but have an attorney eyeball them) so these letters can be updated as needed. Two important components…
How to interpret other documents. Your will, trusts and/or powers of attorney lay out the legal nuts and bolts of how your assets, financial affairs and health decisions should be handled—but sometimes don’t provide background or a personal touch. Example: A trust might state that funds should be used to “maintain the standard of living” of a surviving spouse—but what does that mean? What sort of bills should be paid? To what degree should the trustee trust a spendthrift heir’s requests for money? Consider what advice you would want if you were the executor, trustee or agent. The guidance you provide is not legally binding but can help this trusted person oversee your money or health.
Information to manage your affairs. It isn’t easy to figure out someone else’s financial life. You can reduce the odds of costly oversights by consolidating information. Efficient way to do this: Create a series of lists, and save them in a password-protected document on your computer. This digital document should list…
Financial accounts. Cite your contact person at the financial firm and/or the passwords needed for account access.
Recurring bills and other expenses, including insurance policies, credit cards and loans. Or provide instructions about where to learn about recurring expenses—you might tell them to refer to the checkbook register in the top drawer of your desk…or access the bill-pay software program you use. Be sure to provide any necessary passwords.
Where to find important documents—tax returns and personal documents such as birth certificates, etc.
Names and contact info of your financial advisors—tax preparer, financial planner and/or estate-planning attorney.
