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At BWM Financial we feel that nothing drives your financial goals more than your values. All the other pieces of your financial plan are in service to those values and your estate plan is the way you ensure that the care and protection you provide for your family continues. Legal structures and financial arrangements are part of the plan, but an important piece is the letter of intent. This speaks to your loved ones in your words and lets them know the spirit behind the decisions you’ve made. 

There are many creative ideas for your letter of intent, including stories, family values around wealth, and intentions around shared gifts. It’s called a “letter”, but it does not need to be a typed document. You can include a video or audio recording, photographs, or even handwritten notes to communicate your care, thoughts, and ongoing love for your family through the plans you have made.  

What is a letter of intent? 

A letter of intent is a document left to your executor or beneficiaries to provide details not included in the rest of your estate plan. It is a blueprint that explains the intentions that guide the legal and financial instruments that make up your estate plan.  

There are many names used to describe the letter of intent. You might have heard of an ethical will, final wishes, beneficiary letter of instruction, letter of last instruction, side letter, explanatory letter, or letter of wishes, to name a few.   

What is included in a letter of intent? 

Unlike a will or trust, a letter of intent is a flexible document that spans a broad range of topics, depending on each family’s situation. For some of the below topics, such as financial information and digital assets, best practice would be to keep an updated list of these; this can simply be included with your letter of intent.  

  • Funeral and burial arrangements: What type of funeral/memorial service would you like to have? Are there any special songs to be played or food to be served? Do you wish to be buried or cremated? Do you have a plot already, or any other special instructions that your executor might not be aware of? 
  • Financial information: Where are your most important documents stored, and what are the instructions for accessing them (such as a vault combination)? Who are your trusted advisors (tax preparer, attorney, investment advisor, and others)? Where are your financial assets held? What investment real estate do you own? What life insurance policies do you own?  
  • Digital information: Where are your important online accounts? What are the passwords and where are they stored? Do you own any digital assets (website domain names, electronically stored photos and videos, social media accounts, and others)?  
  • Personal items: Do you have any specific instructions for family heirlooms and keepsakes? Do you have important jewelry, artwork, automobiles, or other items that you want to leave to specific individuals? Do these items have any special care instructions?  
  • Personal message: What final message would you like to leave family and other loved ones? Are there any meaningful songs, poems, religious texts, or other writings that you’d like to share? Are there any photos or memories that your family would enjoy?  
  • Special-needs family members: Making provisions for a special needs family member will potentially require legal and financial structures to continue their care, appoint a guardian, and ensure that any inheritance does not interfere with public benefits such as SSI or Medicaid.   Reference to these documents can be part of your letter of intent, but what you should also include is any direction on their wishes, their medical professionals, care protocols, education, enrichment, etc. If you’ve been caring for them, creating a document that ensures the details of your life together are known and continued can ease the transition for this special person.  
  • Instructions for care of pets: Unless you have provided for your pets in your will or left them a trust, this is great place to make your wishes known. Creating a file with vet info, daily routines, etc. can be a big help. Of course, making sure that the person you wish to care for them wants to assume this responsibility is very important.  
  • Clarify your intentions: A letter of intent also provides a rationale behind certain gifts. This is especially important when giving disproportionate amounts. You may wish to leave more to a sibling who is struggling financially or less to a child who will inherit your life insurance policy. A letter of intent allows you to state, in your own words, why you established your plan the way it is. This clarity can head off conflict and misunderstanding among beneficiaries.  

What is not included in a letter of intent? 

Unlike a will or trust, a letter of intent is not legally binding. It is meant to complement, not replace, the other documents in your estate plan. A best practice is to avoid a lengthy letter of intent, as a court may see it as replacing your other estate planning documents. Also, it is crucial to make sure no requests contradict your legal documents. Your estate planning attorney can review your letter to ensure it is in alignment with all provisions of your plan.  

How do I write a letter of intent?  

The more personal, the better. Here are a few ideas to get started: 

  • Record a video with an inspirational message, favorite poem or religious text, key events that shaped your career, or stories about family history. This creates a memorable keepsake for generations to come, even for those you might never meet.  
  • Include instructions around your family values when it comes to making and preserving wealth. This is especially important for affluent families leaving a significant nest egg. Unfortunately, wealth is often not successfully passed to future generations. In fact, 70% of the time wealth does not transfer to the wealth-creator’s grandchildren. Communicating with your heirs about wealth, during lifetime and in your letter of intent, is an important way to preserve and even grow your legacy for future generations.  
  • Give suggestions for shared gifts that bring family together. You can leave a vacation trust where family members take turns planning a yearly trip, or a property that they can share together or use in turns.  
  • Leave a collection of treasured photographs of your life or from previous generations. These can be added to a photo album or preserved digitally.  

Sample letter of intent 

To create your own letter of intent, start with our “Leave a Map, Not a Mess” guide. This checklist will walk you through key areas to communicate to your heirs.  

Creating a Solid Estate Plan 

A letter of intent is meant to be the guide to the decisions you’ve made in your plan but doesn’t replace the legally binding documents drafted with your estate planning attorney such as your will trust and others. Making a very comprehensive plan is key.  

Keep detailed files of your assets 

It can be difficult for executors and beneficiaries to track down financial assets and legal documents, especially in a large estate. Investment funds, titles to real estate and automobiles, business documents, personal loans, mineral rights, and other important legal agreements can easily become lost. Beneficiaries might be forced to wait for statements and dividend checks to arrive in the mail. It can become an endless detective case for your loved ones.  

While there are services to help beneficiaries track down assets, they often command a high price (often 25% of recovered assets). Beneficiaries of San Diego residents can use California’s unclaimed property search tool (https://ucpi.sco.ca.gov), but a similar search must be done state-by-state for individuals who have moved around significantly or done business in multiple states.  

Give your family peace of mind during this stressful time by leaving detailed instructions and organized files. Clients of BWM also benefit from having updates net worth summary sheets included in their financial plans and access to our secure, electronic vault on the BWM EMX website.   Your work today is time well-spent for your loved ones.  

What are the most important estate planning documents? 

When it comes to estate planning, here are the key documents that every plan should likely include: 

  • Living Will: Plan for leaving your wealth and providing guardianship for minors and those in your care 
  • Trust: Framework for managing and distributing your wealth 
  • Power of Attorney & Advanced Healthcare Directive: Authorizes trusted individuals to make decisions on your behalf regarding financial, medical, and end-of-life decisions 
  • HIPAA Waiver: Grants access to your medical records so your agent can make the best health care decisions on your behalf 

Additional documents may be required based on your family situation. These include an ILIT (Irrevocable Life Insurance Trust), CRT (Charitable Remainder Trust), special-needs/spendthrift trust for beneficiaries unable to handle finances on their own, pet trust, and others.  

For more information on the basics of an estate plan, Patrick Ford sat down with San Diego attorney Teddy McNamara to discuss common questions about estate planning. 

How sturdy is your estate plan foundation? 

Even with the essential documents above, you must regularly review your estate plan to keep it current. As life changes, our estate plans should change right along with it. Births, marriages, sale of real estate, new tax laws, changing tax residencies, and more will impact your estate plan. The documents that once captured your wishes and family situation may no longer fit.  

While we can’t always predict these changes, we can respond appropriately to stay in control. Review your estate plan every 3-5 years or following any major life events. Check for outdated beneficiary designations, executors, and trustees who are no longer the right fit for making important decisions, and assets missing from your trust. 

For many of BWM Financial’s affluent clients, tax laws are also a meaningful consideration. While the 2021 federal estate exemption stands at $11.7 million per person, it is set to fall back to $5 million per person (adjusted for inflation) in 2026. All assets above the limit face a flat 40% tax. And while California residents do not have a state-specific estate tax, many other states (such as Hawaii, Washington, and New York) have an inheritance or estate tax.  

Estate taxes are especially problematic for wealthy families heavily invested in real estate, family-owned businesses, mineral rights, and other assets that are difficult to sell. Because estate taxes must be paid nine months after the date of death, heirs can be left scrambling to foot the bill. They may be forced to sell cherished family assets, often at a fire sale loss. Advanced planning techniques—such as estate freezing, installment sale, private annuity, or grantor trust—can help heirs keep all that they inherit.  

Time to put it all in action  

While estate planning can feel overwhelming, it doesn’t need to be. A good estate planning attorney and wealth management team who takes time to understand your situation can make this process smooth and manageable. Just make sure to add the finishing touch through a letter of intent. You will gain satisfaction from taking care of your family and peace of mind knowing your wishes will be carried out.  

Not sure that your estate plan still matches your wishes, or looking for ideas on creating a letter of intent for your unique situation? Contact our office today to learn how we can help.   

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Investment advice offered through Stratos Wealth Partners, Ltd., a Registered Investment Advisor DBA BWM Financial.  The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stratos Wealth Partners and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.