Writing Family Love Letters for Estate Planning

The typical result of an Estate Planning strategy is a collection of legal documents with sterile discussions of trusts and property distributions. It need not be that way. Your estate planning and your legacy can be enhanced by adding to your plan documents that are more personalized and speak directly to your loved ones.

Certainly the main focus of estate planning should be ensuring that your estate is transferred in the most efficient and economical way to those you desire to have it. The assets you worked a lifetime to build should be used to achieve your final goals and wishes. After that work is completed, however, there is more you can leave to loved ones.

A couple of estate planning features are growing in popularity. These are more personal than other parts of the estate. One feature I call an instruction letter, and the other often is called either an ethical will or a family love letter.

I long have advocated the use of an instruction letter to your executor and loved ones. This letter is a non-binding expression of wishes and instructions. At its best, it is more than a letter. It is a notebook with a number of different documents.

It lists your key advisors, the location of important documents and property, and gives advice about how to handle certain assets. The advice is particularly important with specialized assets such as businesses, real estate, and collectibles. The instruction letter also contains personal wishes, such as burial and memorial service instructions.

If there is anything unusual or unexpected in the estate planning process, the instruction letter can explain this. For example, children might receive unequal shares of the estate or someone outside the family (including a charity) might receive a portion of the estate. This letter is a good opportunity to explain your reasoning in non-legal language. That can soothe hurt feelings, answer questions, and prevent long-term problems for the estate and the family.

The instruction letter is the best gift to leave your heirs, as I have long stated. More and more estate planning specialists are encouraging their clients to add one to their plans and are providing model forms or sample questions to guide the letter writing. The letter saves time and money, eases the burden at a stressful time, and helps ensure the estate is administered according to your wishes.

You can find more details about the instruction letter and documents to include with it in my report, To My Heirs. The booklet contains forms you can complete that will ensure your executor and heirs handle the estate efficiently and the way you want. You can learn more obtain the report and order is in the Bob’s Library tab at www.RetirementWatch.com.

An estate plan can be further enhanced and personalized by using another tool that is growing in popularity. The tool is known as the ethical will and also is not legally binding. It is addressed to family members and perhaps other loved ones. The ethical will isn’t directed at practical, immediate issues; it is more philosophical and personal.

The ethical will springs from Jewish tradition. There are examples of ethical wills in the Old Testament (Genesis Chapter 49; 1 Kings Chapter 2) and other Hebrew literature.

The ethical will used to pass one’s personal and family history, wisdom, and life lessons to loved ones. Usually it is addressed to the immediate family, but some people have written ethical wills to be read at their funerals or memorial services. The document is not supposed to focus on death or other negative topics. Instead, it is meant to be uplifting, philosophical, instructional, and at times humorous.

The bottom line of an ethical will is to make sure your children or other loved ones know what really mattered to you or what you wanted for them. Often, discussions about these matters never occur in families or get lost among the other discussions and activities of busy lives.

An ethical will can be fairly simple. A father might encourage his children to visit and call their mother regularly and look after her needs. Or a parent might explain why special attention was directed at the needs of one of the siblings and encourage the others to continue that practice. Some ethical wills encourage youngsters to continue in the parents’ faith and raise their children in that faith.

Typically the ethical will is a separate document. But it can be incorporated into or even be the regular will. The classic example of this probably was Jack Kelly, best known as actress Grace Kelly’s father but also a successful contractor. Kelly decided to write the will himself in his own style and integrate instructions about his property with observations about life. Consider a few excerpts:

“I want you all to understand that U.S. Government Bonds are the best investment, even if the return is small?. As the years gather you will meet some pretty good salesmen who will try to sell you everything from stock in a copper or gold mine to some patent that they will tell you will bring you millions, but remember that for every dollar made that way, millions have been lost. I have been taken by the same gentry but that was perhaps because I had to learn from experience?.

“To Kell, I want to say that if there is anything to this Mendelian theory, you will probably like to bet on a horse or indulge in other forms of gambling ? so if you do, never bet what you cannot afford to lose and if you are a loser, don’t plunge to try to recoup. That is wherein the danger lies. ‘There will be another deal, my son, and after that, another one.’?

“In this document I have given you things, but if I had the choice to give you worldly goods or character, I would give you character. The reason I say this is that with character you will get worldly goods, because character is loyalty, honesty, ability, sportsmanship, and, I hope, a sense of humor.”

I don’t recommend writing your own will in this manner, but writing an ethical will that reflects your personality and philosophy can be a good gift for your loved ones.

An ethical will gives you a chance at a little bit of immortality. You might be remembered for what is actually important to you instead of the random memories of others. For more on ethical wills, read The Rich Die Richer and You Can Too by William D. Zabel.

RW November 2011