Benefits of Writing a Legacy Love Letter to Heirs

The death of a loved one can be a difficult time for any family. Even as people mourn, they're faced with the daunting task of settling the deceased's financial affairs and managing a funeral or memorial—all while trying to understand and respect their loved one's final wishes.

Some of this can be mitigated by having open conversations with family and friends during your lifetime, outlining any succession plans for the family business, introducing family members to your advisory team, and discussing distribution of meaningful personal property. However, an additional step to help ease the burden of your passing is to write what I like to call an "I love you letter" for the people closest to you.

This is not a formal estate-planning document per se, but a personal letter in your voice, expressing your wishes, instructions, and perhaps telling your loved ones one more time how much you cherished them and what you wish for them in the future.

Ideally, it will also provide vital information, all in one place, to make things easier for those who take over your responsibilities, along with explanations for why you set up your estate the way you did. You might also want to address any areas where you worry misunderstandings could arise, since heading off potential conflicts can be its own kind of gift to your heirs.

Here are five topics to consider for your letter. You don't have to include them all—just take what works for you and skip what doesn't. 

To help reduce the chaos and confusion your family may experience, ask yourself what information they would need if you weren't there to guide them.

To start, list the nitty-gritty information they'll need to request or access documents and settle your estate: your date of birth, Social Security number, passport number, driver's license number, and any relevant employee identification number. Also make note of the location of your birth certificate and any marriage certificates, as well as your latest tax return. Be sure to include relevant login information that will make it easier to access your digital records, such as usernames and passwords to your computer, phone, email, bill-paying apps, and social media accounts.

You should also make a list of the people your family will need to know how to reach, including accountants, lawyers, trustees, and the executor of your estate. Describe the services these individuals provide and any specific information or documents they may have that could be helpful. You might also explain why you work with these individuals—especially your choice of executor or trustees, as this sometimes can cause distress among family members.

Next, make a complete list of your accounts, including bank accounts, safe deposit boxes, investment accounts, retirement accounts and pensions, insurance policies, real property, cryptocurrency, stock options, and veteran benefits. You can capture most of these details using Schwab's Asset Inventory Worksheet, which can be a great addendum to your love letter.

For accounts not listed on the worksheet, be sure to include:

• Location (and advisor, if applicable)
• Title or ownership
• Account number
• Beneficiary designation or transfer on death certificate
• Usernames and passwords for digital access

For real property or business interests, include location and type, percentage of ownership, and note the location of deeds or partnership agreements.

Your formal estate plan—your will, beneficiary designations, and trust information—will cover the most valuable assets that you intend to pass to your heirs. Typically, though, there will also be a house full of things, a lifetime of possessions, that still need to be divided or disposed of, even if they're not particularly valuable. And too often, items with less monetary value but more emotional importance can be a source of family conflict.

Your letter is a good place to address any decisions about who should get specific items—and to explain why. For example, if you know a set of porcelain dishes or piece of art has particular importance to one of your heirs, lay out the reason and say that you support it. Whatever you decide, let your estate-planning attorney know about the list and have them cross reference it against any of your legal documents to make sure they don't conflict.

You might also weigh in on how you want to handle all the remaining items that no one wants, perhaps through an estate sale or donation to a charity of your choosing. Although it may seem like a small detail, it will be one more decision your survivors don't have to make. 

If you haven't addressed the topic with family, they'll want to know your preferences for a funeral or memorial service, and for burial or cremation. Do you want something specific to happen at your service, or someone in particular to speak? Is there a particular location you desire for the service? Are there details about your obituary, such as charitable donations, you'd like included? Sometimes, these details will have been discussed at length, but even so, it may make sense to spell out your wishes to make things easier for those who have to execute the plans.

Additionally, if you've purchased a burial plot, tombstone, or funeral services in advance, you should provide contact information and relevant paperwork. 

This might be the hardest part of the letter, but also the most important. Taking the time to reflect on your personal values or feelings, or perhaps family history and memories, can be both a comfort and a gift to your loved ones. The letter may never feel perfect in your mind, but whatever you choose to share is likely to be treasured by your family.

You could start by explaining your estate-planning decisions and expanding on your hope or vision for the wealth you're passing down to your heirs, or the legacy you're shaping with donations to charity. You can go further by sharing what you've learned in life, what you wish for your family, and what you hope might happen in the future. This part may also include any mementos or family recipes, news clippings, pictures, etc.

Keep in mind that developing and crafting this section may take time, introspection, and emotional energy, and may require several drafts. If you feel more comfortable expressing yourself verbally rather than in writing, you might record a video. If you go this route, make sure someone has the link to the file or knows how to access the video.

To be sure, putting these details down in writing creates a significant security issue. If you plan to store the letter digitally, it should be on a password-protected drive; if it's a paper copy, it should be in a locked safe. (A safe deposit box is an option, as well, but it adds a layer of complexity and can be a multi-step process that can take time.)

You'll probably only want one or two people to have the password to the file or the combination to the safe, and these should be people you trust completely, such as a spouse, child, or your executor.