Estate Planning for those you love can dramatically alter the course of your family for generations. In his last will and testament of 1799, George Washington, laid out a clear vision for his legacy. He bequeathed the “use, profit, and benefit” of his whole estate to his “dearly beloved wife Martha Washington.” He also forgave the debts of many of his family members, financed the establishment of a school for orphans, earmarked stock for what is now Washington and Lee University and made arrangements to care for others dear to him.
Clarity: Providing a Deeper Understanding of Your Intent
When you think of estate planning, you probably think of your last will and testament. However, a will may not fully convey the spirit and subtlety of your intentions.
You may want to consider the role of a “personal statement of intent” or a “letter of wishes” within your own legacy design. This document works in tandem with your will to convey a deeper level of personalization — and possibly explanation — for your heirs. This private document is non-binding. Whereas a will may become a publicly registered document under the probate laws, a personal statement of intent will be accessible only to the people you stipulate — typically your executor, trustee and heirs.
A personal statement of intent can be useful in clarifying the rationale behind the formal provisions of your will. It can serve a wide range of purposes:
- If you divided your estate inequitably, for example, your personal statement can be used to rectify the perception that you are favoring one heir over another. You can also use a personal statement of intent to defuse possible guilt over the disposition of your assets.
- If you are bequeathing long-held company stock, for example, you may want to address your heirs’ hesitancy to sell those shares.
- Finally, a personal statement can be valuable in conveying your hopes and aspirations for your loved ones in ways that don’t fit the traditional parameters of a will. For example, you may suggest that your family retain your vacation home or ranch for a period of years, using it as a place to convene multiple generations for family reunions. Or you may use a personal statement to outline the preferred care of a beloved family pet.
Katherine C. Akinc, of counsel at Brink Bennett Flaherty Golden in Austin, explains that a personal statement of intent can be an effective means of conveying a benefactor’s rationale: “Most people have thoughtful, well-reasoned explanations behind the division and distribution of their estates. However, if such explanations are not communicated, beneficiaries often leap to the worst conclusions for why Mom gifted a larger estate share to one child over another, or why property was left in trust rather than outright.”
While not everyone needs a personal statement of intent, families with nontraditional structures or inequitable distributions may benefit from the clarity and comfort they can provide. Their innate flexibility and adaptability provide benefactors with a timely and deeply personalized vehicle to relay the spirit and mindset behind a benefactor’s final intentions. Your estate planning attorney can assist you with the preparation of this statement and ensure that it functions smoothly within your overall estate-planning framework.
Customization: Honoring the Singularity of Your Intentions
A final consideration in your estate planning should be the unique nature of your legacy. Both in terms of your assets and intentions, the distinctive nature of your circumstances should be honored, in death as in life. Your wealth, family dynamics and philanthropic interests are uniquely yours. It is important to work with an adviser who appreciates the intricacies of your financial picture, as well as the subtleties of your vision and values.
When you partner with an adviser who is a fiduciary, you are working with someone who is legally bound to pursue the long-term best interests of your family. During critical crossroads, sometimes the wisest action is to forestall large-scale changes. For example, a surviving spouse will likely have different cash-flow needs following the death of his or her spouse. A thoughtful financial adviser will be sensitive to that evolving change, possibly refining a client’s portfolio allocations over time, but showing due restraint in implementing any changes. In estate planning, as in other aspects of your wealth, your financial adviser should act as a critical extension of you, your wishes and your intentions, tending to your vision with care and sensitivity.
As you think about your own estate planning needs, consider the foundational values of communication, clarity and customization within your own legacy design. Building on this foundation, you can have the satisfaction of “setting your hand and seal” to reassure your heirs, convey your final wishes, and provide comfort and consolation to the people you love.
Chris Creed is a Senior Lead Adviser for Venturi Wealth Management. Chris partners with new clients to organize, plan and manage all aspects of their family's financial life. As a Certified Financial Planner® professional and a Certified Private Wealth Advisor®, Chris creates customized wealth planning strategies unique to highly affluent clients.
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