When you make out a will or bring one up to date, it’s also the practical time to write a "letter of final instructions" — an informal document that isn’t legally binding and usually is addressed to your surviving spouse, one of your adult children, your lawyer or your executor.
Why is it worthwhile to go through the chore? So that your heirs are made aware of your assets, as well as how you want your personal affairs handled. These are important details that can change quickly and are usually impractical to put into a will.
Here are some reminders on the kinds of information to include:
- Let your heirs know how much they can expect.
- List all benefits due them from your employer or your business or professional practice. These fringes include life and accident insurance and retirement plans, as well as benefits from Social Security or other sources.
- Disclose, too, where you keep copies of checks, credit card slips, and other documents that supply the information you rely on at tax time to justify the amounts shown as income, deductions, exemptions, and other 1040 figures for the past three years or so. If the IRS should question those figures and the necessary substantiating records are unavailable, then your estate may be drastically diminished by assessments for additional taxes, interest charges, and, perhaps, penalties. Ditto for any applicable state taxes.
Avoiding a Nightmare
About Julian Block
Attorney and author Julian Block is frequently quoted in the New York Times, Wall Street Journal, and the Washington Post. He has been cited as “a leading tax professional” (New York Times), an “accomplished writer on taxes” (Wall Street Journal), and “an authority on tax planning” (Financial Planning magazine). More information about his books can be found at julianblocktaxexpert.com.