Even with a formal estate plan in place, it is a good idea to organize your personal paperwork and inform your heirs of basic decisions and wishes that will facilitate the settlement of your estate after your death.
In doing so, you can ensure that your preferences for funeral arrangements will be followed, friends and family that are important to you may be notified of your death, and items with sentimental value may be properly passed on. Without organized financial records, it will be difficult for your heirs to locate all of your assets, with the risk that certain stocks, bonds, partnership interests, bank accounts, real estate, or insurance policy benefits may go unclaimed.
An organized way to address these concerns is to prepare a personal letter of instruction that covers the following items:
The Rationale for your Estate Plan
Your letter of instruction is where you can discuss why you distributed your estate in the manner you did. You can give a general overview of your estate plan, or you can discuss your plan in specific detail, explaining to your heirs how each asset will be distributed. If you have selected only one of your heirs as executor or trustee, you might explain in your letter the reasons why you chose that individual and why you did not chose another. You might also explain any significant lifetime gifts that you made to some of your heirs.
Itemized List of Assets
Include in your letter of instruction an itemized list of all of your assets and the location of all important documents concerning those assets. Prepare a list of all checking and savings accounts, including the bank name, account numbers and individuals on the account. You should also list any real estate or cooperative apartments that you own, including the details of any mortgages. Provide the details for insurance policies, including policy numbers, effective dates, levels of coverage and policy location. Also list your automobiles and the location of the automobile titles. In addition, you should also list your outstanding debts.
List the names, addresses, and telephone numbers of important individuals your heirs may need to contact, including employers, attorneys, accountants, insurance agents, investment managers and financial planners.
Personal Papers and Account Statements
Indicate where personal records are kept, including your birth certificate, marriage certificate, divorce or separation agreements, diplomas, military records, and naturalization records. At a minimum, you should keep at least three years of bank and brokerage account statements, tax returns and cancelled checks, and you should indicate where these are kept.
Safe Deposit Box
Indicate where any safe deposit box is located and what is contained in the box. You should note where the key is kept and who has access to the box. You might also consider adding a family member as a co-signatory to the safe deposit box in order to facilitate quick access to the box following death.
Disposition of Personal Items
All well drafted Wills contain a clause designating the beneficiaries of your personal tangible property. You might, however, wish to give your executor some further guidance as to how you would like such personal items distributed, including jewelry, photographs, personal collections, pets and furniture. You should be sure to check your homeowner’s insurance riders for any scheduled jewelry or other items that you might like certain heirs to receive.
Your letter of instruction should also include your preferences for funeral arrangements, including whether you want a religious or secular service, whether you want flowers or donations to charity, whether you want to donate your organs or body to medical institutions and where you would like to be buried or how your remains should be disposed of. These are items your heirs may feel uncomfortable asking about, but knowing your specific wishes can be a great relief and can be helpful in avoiding conflict after your death. You might also list any friends or family you would like contacted after your death.
As it is good advice to have your will reviewed periodically, you should also review and update your personal letter of instruction from time to time as your thoughts on these subjects can change over time. Finally, be sure to keep your personal letter of instruction it in a place where heirs can find it immediately after your death.
Michael Markhoff, Esq. is a partner at the White Plains, New York law firm of Danziger & Markhoff LLP. This firm is a business and tax-oriented law firm that has been representing dentists for over 45 years. Mr. Markhoff can be reached at 914-948-1556 or by email at email@example.com. Michael Markhoff, Esq. is a partner at the White Plains, New York law firm of Danziger & Markhoff LLP. This firm is a business and tax-oriented law firm that has been representing dentists for over 45 years. Mr. Markhoff can be reached at 914-948-1556 or by email at firstname.lastname@example.org.