Sample Letter to the Family

We often encourage clients to write a letter of wishes or instruction to their family regarding their estate plan. Below is a sample:

February 26, 2013

To J_______, S_____, S______, B_______, S__, J______, and our Trustees,

It’s six years since we put our estate plan into place and wrote the letter below this one. We have not destroyed the earlier letter because most of it is still relevant. Consider this an update.
The major developments since 2007 are the birth of B________ in 2009, and the death of C_______ in 2012. With B__________, as with S____, came much joy. With C_________’s death came sadness, but also about $700,000 from his and R_______’s trusts, so the expectation that our assets would someday exceed 2 million has been realized. We have over $1.5 million at Our Broker; P_____________ owes us $150,000 plus interest (see ____ Realty file); we have smallish sums in Credit Union and Bank; there’s a 50K life insurance policy on Papa; and the rest is in real estate at B________, P_______________, and S____________.
We were wrong in assuming that safe, high-yielding (5% -6%+ taxable: 4.5% tax-free) bonds would always be available, and that the investments at Our Broker would forever be churning out interest of 70-80K per year. Most of what we have at Our Broker is still good bonds, but they are gradually being called (paid off by the issuers), and it is next to impossible to find quality bonds to replace them, so we have started settling for what we consider to be the next best things: a few preferred stocks with yields about as high as we had come to expect from the bonds, but more risk, and about thirty blocks of common stock in solid (”Blue Chip”) companies, which pay dividends of 3-6%, and are riskier than the preferred stocks. The common stocks have, in addition to the dividend income, the potential for growth (increase in value), and it is quite likely that, considered as a group, they will over time increase considerably in value. At present, the investments are yielding about 73K per year. If, after we both have died, the economy returns to where quality bonds are again available, we would highly recommend that you talk to Our Broker or his successor about the feasibility of dumping the stocks and getting back into bonds.
When the first of us dies (assume it’s Papa), Mimi will sit down with Our Attorney at Strauss Attorneys PLLC. to decide whether it makes sense for her to “disclaim” (reject) all or part of what Papa leaves. Whether she disclaims or not, she will be entitled to the income from Papa’s pile for life. When she dies, it is important that J_________ and S_________meet, as soon as possible, with Our Attorney, because there is the possibility of making expensive mistakes.
In broad outline, when Mimi dies (second), J_____ gets our entire interest in the property at P__________, in trust; S_______gets equivalent value in cash or real estate off the top, in trust; and what is left is divided into two trusts, the J_______ trust and the S______ trust. You will each be the sole trustee of your own trust, and Our Attorney will explain why it is best that you keep it in your trust, pulling out all income for living expenses and whatever you care to spend it on, but leaving principal in the trust except as necessary to deal with issues of health, education, and maintenance.
Having paid off the debt to A_____ (51.2K), we now consider that we have, at least informally, an 81% +/- interest in the land at P___________, which it makes sense to retain until Mimi dies (second) so that J________ inherits it subject to the so-called stepped-up basis, which is a very good thing. S_____’s equivalent sum should equal 81% of the then-appraised value of the undeveloped land at P______________. There are provisions for J______ and S_____, should S_______ or J____predecease, but the general plan is that the bulk of everything, after S______ or J_____dies, ends up in trusts for S__ and B__.
S__ and B___ – You’re going to come into a nice inheritance, eventually, which you’ll want to leave in your trusts, drawing out income, for the same reasons that apply to your mother and Uncle J______, so plan on talking to Our Attorney, or her successor, when that is about to happen. Read the 2007 letter – remember, you’re the caretakers of your kids’ money. Be good, and be nice to Our Attorney. She, or her successor, is what is called the Trust Advisor. A trust advisor has the power to change the trusts as necessary, and to cut off anyone who shows signs of not being able to handle money responsibly. Examples would include problems with the law, or with alcohol, drugs, gambling, unwillingness to work for a living, or excessive spending habits. Personally, we would include tobacco, motorcycles, and playing goalie in the list of disqualifiers.
We intend, as long as we are alive, to be reasonably generous at Christmastime; and to advance such lump sums of money as may appear appropriate for house and car purchases and the like. However, while we are both healthy, we are happiest using money for family travel, and we propose to do as much of that as possible, consistent with work and school schedules.
Stay together. Stay together. Stay together. Love each other; enjoy each other; take care of each other. Remember and appreciate how lucky we all are. Live well and have fun. We did.

Reprinted with permission of the family+