FP Answers: What is a ‘letter of wishes’ and how does it help achieve my estate planning goals?

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By Julie Cazzin with John DeGoey

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Q: I was discussing updating my will with friends and a couple of them have included a letter of wishes with their wills. They say it will help preserve wealth and clarify details for executors and beneficiaries. Do I need one and, if so, why? — Thanks, Monica

FP Answers: Monica, most people know it is prudent to have powers of attorney (POA) in place for both property and personal care. It would be awful to be incapacitated without a plan and a clear path forward regarding what is best. People also know that wills are critical for all but the most basic estate transfers.

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However, many people don’t consider the grey areas surrounding the more mundane elements of one’s life, such as personal effects, social media accounts, and small but prized possessions. Hopefully, people have addressed the big-ticket elements of their lives in their wills before they die. But many small and often highly personal things often escape the attention of the person drawing up the will. Also, things change.

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One way to deal with this lack of certainty regarding posthumous intent is to execute a letter of wishes. Depending on the wording, it may or may not be legally binding, even if the intent is clear. If done with proper care, however, the wording can make your decisions binding. But the wording might also be taken as a mere suggestion, so how you give instructions can be critical.

What is the main test in making the distinction? If you want your letter of wishes to be binding, then refer to it in your will and your POA (property), too. Given the need for timeliness, it should be easy to access the document(s) immediately.

There’s a relatively short list of what might be covered. It usually includes decisions about burial versus cremation, organ donations, and any items or personal effects that offer emotional or nostalgic significance to other family members and friends. These days, you also can’t overlook social media accounts (Facebook, Twitter, LinkedIn) and digital accounts (including passwords) for pre-established memberships, billings and donations (Amazon.com, Air Miles, Save the Children).

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Unless current passwords are stored in a safe, easily accessible place, gaining access to the digital footprint of the deceased can become a Herculean task and an awful burden. Bank accounts alone can be a nightmare to access.

A good letter of wishes itemizes what is to be done with each of these accounts and provides the necessary tools to complete the desired task quickly and efficiently. Keeping it in your safety deposit box can save your executor a mountain of work, especially if it includes passwords to all your digital accounts. It should be noted that some providers (Google, for example) allow users to specify what happens when an account goes inactive.

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As is often the case, much of the responsibility rests with the designated persons, and depends on the good judgment of those individuals. No matter how discerning your closest friends are, they are not clairvoyant. If something unexpected happens to you, it is highly recommended that you have already put down your specific wishes so any potential grey areas can be resolved. If there is something where discretion would be a challenge and no clear guidance is indicated, then that guidance should be provided.

Here are some examples of what might be itemized: details regarding employment, including a contact person at the human resources department where you worked; specific friends and family who need to be notified for any reason; where to find documents, including contact info for your lawyer and accountant; any outstanding debts; any life insurance policies (including account numbers); points and rewards program details; social media accounts; professional and recreational memberships; and subscriptions (cable, internet, phone, e-magazines).

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Anything accumulated during your lifetime, no matter how big or small, must be disposed of when you’re no longer around. It’s challenging enough for your closest, most trusted loved ones to cope with your passing. The least you can do is lighten the load by helping them navigate the world without you in a way that removes all uncertainty and makes it easier for them to do what you wanted. Many people may fret over the lack of clear guidance and specifics, but having a letter of wishes will ease the burden for all.

John De Goey is an IIROC-licensed portfolio manager with Wellington-Altus Private Wealth (WAPW) in Toronto. This commentary is the author’s sole opinion based on information drawn from sources believed to be reliable, does not necessarily reflect the views of WAPW, and is provided as a general source of information only. The opinions presented should not be relied upon for accuracy nor do they constitute investment advice. For proper investment advice, please contact your investment adviser. john.degoey@wellington-altus.ca.