Give your family specific instructions to help them deal with your personal and financial matters after you're gone.
We've all heard about kids finding cash in the wallboards of mom's house years after her death, or husbands leaving behind massive debt along with cryptic record-keeping. Estate planning attorney Jeff Scroggin, in Roswell, GA, recalls the wishes of his late father, a World War II fighter pilot, to be buried in Arlington National Cemetery. "Arlington needed my father's discharge papers, or else he'd be placed in cold storage for a few months while the government searched for their copies. On top of spending four days and countless phone calls trying to locate all his other financial paperwork, I then had to worry about giving him the burial he deserved," says Scroggin. "I was very lucky that only days later I found his discharge papers filed in the pages of a novel on his bookshelf."
Scroggin was fortunate, but it'll likely take more than luck to prevent turmoil and trauma for your family after you're gone. Many resources, from brief letters to lengthy organizers, can help you compile every detail of your personal and financial life. These documents supplement your will but aren't legally binding. Besides guiding your heirs in a time of confusion, they can assist you in getting your financial house in order now. You'll benefit from an organized desk, less clutter, and a system for finding important papers quickly.
Letters of instruction. Testamentary letters and letters of final instruction are essentially the same documents with different names. Around for years, they've traditionally been used to dispose of minor personal property, like a Hummel collection or heirloom jewelry, outside of the taxable estate. These letters have grown to include lists of financial advisers, assets and liabilities, estate plan details, and funeral arrangements, all topics that usually aren't covered in a will. Julian Block, a tax and estate planning attorney in Larchmont, NY, suggests his clients prepare their own letter of final instructions, starting out with the physical location of personal documents and records. It should include everything from contact names, phone numbers, and the location of financial accounts, to small bequests and funeral arrangements. These letters provide your family with all the vital information they'll need immediately in the case of your sudden incapacitation or death.
Situations like these prompted Scroggin to develop a standardized letter that combines the elements of testamentary letters with ethical wills (statements of your values), and adds much more. His Family Love Letter includes four distinct sections:
How to prepare your letter. Many products in addition to Scroggin's are available to help you document the specifics of your life. The Internet is your gateway to personal information organizers in every format, from CDs and websites to journals and workbooks (for a sampling, see). But lawyers readily acknowledge it's not possible for any one standardized format to address all of the particulars of everyone's financial and personal situation. The sheer size of such a document would make it overwhelming. Donna Pagano, a vice president with AXA Equitable, which markets an expanded version of the Family Love Letter through its network of advisers, remarks "the longer we live, the longer and wider our paper trail grows."