The Love Letter Few of Us Consider
As part of our A Midyear Financial Check-In: Adjusting the Course newsletter, we mentioned the big “what if?”. What if something unexpected happened, would someone we trust know where to find the information they need?
It’s not something anyone wants to think about, let alone talk to their family about. Strangely though, preparing for it provides an odd sense of comfort. A lot of our fears about that “what if” are tied less to concerns about ourselves and more to those we might leave behind.
Having these conversations with our family and creating a Love Letter for our executor can give us some confidence that at least one aspect will be easier for those we leave behind.
An Estate Plan Love Letter
Odd as it may sound, “Love Letter” is an official term. They are not legal documents, yet these letters, also known as a “Letter of Instruction,” are an essential piece of estate planning. They detail important information to and for someone in the event something should happen to you.
While we may write personal messages to be shared with individual family and friends after we die, an estate plan Love Letter is usually reserved for our executor. It’s our last way of expressing our thoughts and wishes and providing guidance for the person we’ve asked to deal with our estate.
Such letters are especially important if our executor is a loved one. They’ll have to sift through mounds of paperwork—legal and financial—possibly deal with other family or friends angry about some of our decisions; and they’ll have to do this while they themselves grieve.
Important Accounts
Our Love Letter may cover a wide range of information, and our important financial accounts are at the top of the list. Many of us think we’re okay in this regard because a partner or possibly a parent or child has access to our bank account. We forget sometimes that our bank accounts aren’t the only places our money lives and to which others might need access.
A good place to start is with the accounts beyond our standard checking or savings account. These might include:
- Secondary bank accounts
- Credit cards
- Retirement and investment accounts
- Safety deposit boxes
- Life insurance policies
Money can also sit in places that don’t immediately come to mind. If they aren’t on our radar, they’re unlikely to be on our loved ones’ radar, either. For example:
- PayPal, Zelle, Venmo, and other cash transfer accounts
- Digital wallets like Google Pay and Apple Pay
- Stored-value accounts like gift-card balances, prepaid cards, airline/hotel points or other accumulated rewards
- Health savings accounts
Financial Obligations
Financial obligations belong in a Love Letter, too, since they still have to be resolved even if we’re no longer around to handle them. These can include anything from credit card bills to mortgage payments. Other common examples might include:
- Car payments
- Student loans
- Tax payments
- Insurance premiums
- Utilities and household services
As with our accounts, it’s easy to think of the larger financial obligations and overlook smaller, regular subscriptions. Internet and mobile phone contracts, streaming and cloud services, gym memberships, magazine or digital subscriptions… Because these accounts may need to be paid or canceled, they belong in our Love Letter, too.
Passwords and Account Access
Putting together a list of what needs to be paid and where the money lives is great. But that information won’t help someone without the passwords and account access they need.
With so many companies requiring multifactor authentication with an app or text, digital access is vital to our financial lives. Moreover, many financial institutions run more through apps now than websites. If our executor can't access those devices or accounts when they need to step in, they may have trouble accessing the accounts themselves. Hand-in-hand with securely sharing passwords, it’s important that our designee knows how to access our phone and email and where to find the information they’ll need to get through any additional security measures.
The Love Letter should also include the names and contact information for any financial or legal professionals we work with. Our lawyer, financial advisor, CPA, and so forth. Separate from the Love Letter, it’s important to let these professionals know in advance who our executor is and that they’re our designee. Remember, a Love Letter, while important in estate planning, is not a legal document. Naming someone in a Love Letter as our designee is not enough to give them access to everything.
Key Documents
Our financial accounts are only part of the picture. Our executor will also need to access our will, trust, social security card, driver’s license, deeds, life insurance policy, and so on. Our Love Letter should also explain where these documents are kept and how to access them (safe combinations, safety deposit box information, etc.).
Putting Your Family in the Know
These are difficult conversations to have with family, but they're necessary ones. Bringing up our own death or incapacity isn't easy; never mind asking a parent or sibling to hand over account details should the big “what if” happen to them.
Writing a Love Letter and having these conversations with family is likely the last thing on our mind as we approach the holiday season. Despite that, this is a good time to start raising this subject. An estate plan Love Letter can be one of the greatest gifts we ever leave a loved one.
This can be overwhelming, whether you're organizing your own information or figuring out how to approach a family member about doing the same. No matter where you are in the process, starting to put together a will or a trust or trying to write a Love Letter, Revival Wealth can walk you through everything.
Don’t hesitate to get in touch. Make an appointment to learn how we can help make this process easier and more manageable.