July 01, 2019 Finance

A Trend in Estate Planning: Legacy Letters

Ben Schock

More parents are writing life lessons to their children, but there is a risk they can complicate estate planning.

If you’re a parent, you’ve probably worked hard to instill some degree of ethical integrity into your children. Like most parents, you’ve accomplished this task throughout your long life.

However, when some parents pass, they leave children who haven’t yet developed into adults with a strong moral compass. Still others pass away at an old age, but still wish to convey some set of ethical precepts to their mature children and other descendants.

In both cases, some parents and guardians choose to leave their descendants or beneficiaries with a written set of directions to follow for living an ethical life. These are known as legacy letters, which are sometimes also referred to as ethical wills. Is this something you should consider writing today for your children to receive after you pass? Here’s some insight to help you decide.

A letter for the future

A legacy letter isn’t a legally binding document. It doesn’t have any effect on the distribution of assets from a parent’s estate, nor does it exert influence on a trust or weigh for or against the validity of a power of attorney or other directive.

However, they are documents that set forth a request, instruction, or example by drafters following their death. Also, perhaps due in part to the prevalence of testamentary gifts that occur when some specific condition occurs, legacy letters may easily confuse those who read them into believing they carry some mechanism for legal enforceability.

What does a legacy letter contain? They don’t need to follow any specific formula. After all, having no legal effect and not being a legal document of any kind, they need not contain any information in particular.

Frequently, legacy letters make some reference to the drafter’s religious or spiritual beliefs; offer some wishes or blessings to the drafter’s children, their generation, or society as a whole; or suggest steps for recipients to take to be more successful, more ethically conscious, or happier. A legacy letter may also share some of the mistakes drafters have made in their own life.

I’ve found in my own legal career that clients also struggle with the language in these documents, and they undergo frequent and numerous changes before the recipient actually gets to take a look at the legacy letter.

While these are noble purposes, confusion can arise when such letters become intermingled with estate planning documents that do have a legal effect. For instance, a legacy letter may make some suggestion or admonition that contrasts with a recipient’s lifestyle. Parents might use it to express their satisfaction or dissatisfaction with the person the child has a relationship with. This could lead to conflict between the child and the child’s partner, perhaps intentionally, even though the partner may not be a beneficiary of the estate plan.

That may make that recipient feel alienated, but more significantly, it may make the drafter’s relatives, trustees, or estate administrators believe it was the drafter’s intention to disinherit or punish that recipient for some perceived moral deficit. If those statements are construed by any party as having a testamentary intent or impact, it may lead to costly and otherwise avoidable litigation.

How to avoid problems

The time for writing a legacy letter is entirely up to you. Some people prefer to draft a legacy letter as they contemplate an anticipated passing and intend that the letter be a sort of last communication of their ideals or ethics.

Some others prefer to draft the letter with no anticipation of their passing; they simply intend to document their morals and beliefs while they’re alive to pass them down to their children for posterity. In some cases, relatively young parents draft a legacy letter, perhaps when they have young children, to prepare for a worst-case, catastrophic scenario that results in their passing.

There may be some drawbacks to storing your legacy letter alongside your valid estate planning documents; the ethical guidance you set forth in your legacy letter may be confused with the actual conditions in your will or trust. A good example would be talking about the value of the college education you received. You could express your desire for your children to complete their education just as you completed yours.

So while your legacy letter can include your wish that your children complete their education, most estate plans don’t have express provisions preventing beneficiaries from receiving their inheritance unless they complete their education. We generally counsel clients against strict provisions that have such a requirement.

While education is valuable, there are certainly many examples of college dropouts or others who’ve done quite well for themselves without completing their education. That’s why I advise clients that while it’s wise to stress the value of education, it’s probably best done through a legacy letter rather than through the estate plan.

One method to avoid this confusion is to present your legacy letters to the recipients before you pass on. While this might seem contrary to the purpose of a legacy letter, it’ll permit you to impart your ethical guidance to your children with the understanding that it’s simply suggestions or advice rather than a condition in an estate plan that must be fulfilled by those receiving your letter.

You can also avoid this ambiguity or confusion with some common sense. When you draft a legacy letter, it wouldn’t hurt to explicitly state that it doesn’t change your intent regarding the provisions of any estate planning documents you’ve already created.

Ultimately, while a legacy letter isn’t a legally binding document, while it doesn’t have any effect on the distribution of assets from your estate, and while it doesn’t exert influence on a trust or weigh for or against the validity of a power of attorney or other directives, it does have benefits. It does allow you to express a set of values or morals to your loved ones in a way that simply can’t be accomplished as effectively through a more standard estate plan.

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Ben Schock

Ben Schock is an estate planning attorney at Schock Solaiman Ramdayal PLLC in Macomb County, Mich.