Some people use letters and videos to express gratitude, offer apologies and share life lessons with family members.Extreme Media/iStockPhoto / Getty Images
Sign up for the Globe Advisor weekly newsletter for professional financial advisors. For more from Globe Advisor, visit our homepage.
To reduce family infighting over inheritances, more clients are writing letters of wishes as part of their estate plans to clarify their intentions. These letters explain how and why the client divided their assets the way they did, which may look inequitable to the heirs.
David Burnie, certified financial planner at Ryan Lamontagne Inc. in Ottawa, has seen more appetite for these letters in his practice. He attributes this to clients who need to address surviving family members left out of their will or receiving a smaller inheritance than anticipated.
He even has clients who have moved beyond letters to record video statements. While letters of wishes and videos are not legally binding, they may help the person drive home their intentions and decision-making process, he says.
Like a will, the letters and videos are traditionally read or viewed by heirs after the family member’s death. Unlike a will, which becomes a public document once probated, letters of wishes and videos can be kept private and confidential, which is appealing to some families.
“They allow people to express their desires and communicate their values and philosophies on the distributions,” Mr. Burnie says. “But the fact that it’s not legally binding needs to be expressed to the client.”
One benefit to letters and videos is that, unlike a will, they can be updated without any cost or formalities.
Mr. Burnie recalls one client with three adult children who all have different outlooks on life. The client chose to name the eldest child as executor and plans to shoot a video addressing the never-ending disagreements between the three siblings. While the client is a nonagenarian, Mr. Burnie says she is sharp and financially astute.
“She wanted to put together a ‘don’t even try to challenge the will after I die’ type of video,” he says. “She’s clear in what she wants done, no one’s manipulating her. I think the video will offer that extra benefit. It offers clarity.”
Mr. Burnie says some clients use letters and videos to express gratitude, offer apologies and perhaps even life lessons they hope surviving family members will follow.
“[The] letter of wishes can reinforce what’s important to them,” he says, such as a memorial service.
On the other hand, some clients may create videos to convey personal sentiments, he says, hoping it will be comforting for the family to see them expressing these thoughts when they’re healthy and happy.
“As our clients get older, they get quite nostalgic,” Mr. Burnie notes. “Sometimes, they tell me things about their children that they’ve never told them.”
He often advises clients to write or record that information for posterity. One client ended up recording a personal message to each child.
“It may seem like a simple thing, but it meant a lot to the kids,” he says. “It helped soften the family situation.”
Christine Van Cauwenberghe, head of financial planning at IG Wealth Management in Winnipeg, sees letters of wishes as one part of an estate plan.
“Estate planning is more than just a will,” she says. “It’s comprised of several components.”
She hasn’t seen many letters of wishes yet, as just persuading clients to draft wills and powers of attorney can be “overwhelming enough.” (Only half of adult Canadians even have a will, according to research from the Angus Reid Institute.) But Ms. Van Cauwenberghe doesn’t discount the benefit of letters, noting they can be a good forum for clients to address sensitive issues they hope will remain private.
“For those clients who do write one, I suggest the client keep them with the will, powers of attorney and other important documents,” she says.
Mr. Burnie says many clients choose to keep the letters elsewhere due to their intimate and confidential nature. He advises clients to leave the document with the estate lawyer. It’s also important that clients inform trustees, executors and other relevant parties about the existence and location of the letter of wishes and consider sharing copies with them to promote transparency and understanding.
If clients decide to update their letters or videos, they need to ensure the most current version is easily identifiable, he adds.
For more from Globe Advisor, visit our homepage.