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Letter of intent: a useful component of an estate plan

There are many things a Letter of Intent cannot do, and any client who issues one should be aware of them.
There are many things a Letter of Intent cannot do, and any client who issues one should be aware of them.

One element of estate planning that is little discussed but can be very useful is the Letter of Intent. Generally contained within an estate plan, a Letter of Intent contains instructions on how the estate and the decedent’s executors should care for a child, particularly a child with special needs.

Since for most of us, our children are our foremost priority in life, a Letter of Intent can be a crucial document. And anyone who wants to ensure special care for their children should consider including one with their estate documents; there are no real drawbacks to writing one.

On the other hand, there are limitations to one. There are many things a Letter of Intent cannot do, and any client who issues one should be aware of them. Some of the things to keep in mind:

It’s a blueprint for other documents. After putting down specific preferences for the care of the client’s child, those wishes can then be reflected in wills or trusts to ensure that they’re carried out. After all, the financial decisions should be a reflection of how the client wishes the child to be cared for, and not the other way around.

It can be written today, no matter where you and your child are in life. It’s not just that you never know when disaster will strike, although that’s always a good reason to be prepared. Understanding a child — especially one with special needs — is a lifelong journey. It makes sense to start the letter now and add to it as the years progress.

Get the child involved. It’s the child’s life, and he or she deserves to have a voice. And the child will appreciate being allowed to participate in these important decisions about his or her future.

It’s the client’s chance to record everything about their child. A Letter of Intent can do more than just lay out the nuts and bolts for a child’s care. It can let other know all about their personality, what they like and dislike, what their strengths and weaknesses are. This is especially important for anyone who will have an important role in the subsequent care of the child.

It’s not legally binding. There is no legal obligation for anyone to follow everything in the Letter of Intent, so if the client feels the need to have legally enforced directions, they should consider having a lawyer draw up a more formal document.

But courts generally rely on them anyway. If there’s any question about what the client’s intentions were, the courts will generally take the word of a Letter of Intent. And anyone else who has the child’s best interest at heart will look to the Letter of Intent for instruction as well. Most people involved in the child’s life will want to follow the wishes of the parents, so it’s important to have them expressed coherently in one place.

It allows the client to lay out alternatives for the child’s care. Letters of Intent are most commonly used for children with special needs. They allow a parent to insist on the best, most comfortable way to deal with the child’s disability. Especially for children with mental or cognitive disorders, the parents generally know better than anyone else what they are most comfortable with.

Make a list everyone who is important to the child. Include the names, addresses, and phone numbers of anyone who should be contacted if anything should happen to you, including family members, doctors, attorneys, and you, the financial advisor. Obviously, this should be updated often.

It should be simple but comprehensive. This is the client’s chance to tell the world everything about the family and his or her goals for the future. It should include a family history, the child’s education record, what sort of job or social environment the child might thrive in, the family’s religious background, and whatever type of medical and therapeutic care the child thrives under.

Don’t leave out the most difficult decision. The Letter should include what the client wants for the child’s end-of-life care, including funeral arrangements. Just remember: This is the client’s last chance to plan the remainder of the child’s life.

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Nichole Morford

Nichole Morford
Managing Editor

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