Why a Letter of Intent matters
A Letter of Intent (LOI) does not replace a will or trust, but it plays a different—and often vital—role. While formal estate documents control legal title and distribution, an LOI explains the why behind decisions, gives practical directions (funeral wishes, account locations, passwords), and records personal messages that reduce uncertainty and conflict for survivors.
In my practice working with families through estate transitions, I’ve seen LOIs prevent disputes, speed the executor’s tasks, and preserve sentimental value that legal forms can’t express. When paired with up‑to‑date legal documents, an LOI makes administration faster and less emotional for heirs.
(For tax or legal questions, see official guidance from the IRS and the Consumer Financial Protection Bureau.)
Who should write an LOI
- Anyone with dependents, significant assets, or personal wishes that matter beyond legal distribution.
- Executors and trustees benefit from a clear LOI that points to necessary documents and explains intentions.
- Owners of small businesses, digital assets, or family heirlooms—especially where stories or management instructions matter.
If you manage digital accounts, consider pairing this LOI with our guidance on digital estate planning: “Digital Estate Planning: Managing Online Accounts and Assets” (https://finhelp.io/glossary/digital-estate-planning-managing-online-accounts-and-assets/).
What to include — essential components
Use plain language and short sections so heirs can find information quickly. At minimum, include:
- Purpose: One sentence explaining the LOI’s intent and that it’s non‑binding.
- Personal message: A short note to heirs describing values and intentions.
- Contact list: Names and phone numbers for your attorney, financial advisor, accountant, insurance agents, and trusted family members.
- Document inventory: Location of your will, trust, deeds, insurance policies, recent tax returns, and safe‑deposit boxes.
- Financial snapshot: Bank names, account numbers (or where they’re recorded), recent statements, and life insurance policies. Avoid listing full account numbers in documents that could be lost—reference secure locations instead.
- Asset distribution notes: Specific wishes for heirlooms and any non‑legal guidance for dividing personal items.
- Business instructions: Succession steps, access details, and contacts for your business manager or attorney.
- Funeral and end‑of‑life preferences: Burial vs. cremation, service tone, songs, and special instructions.
- Digital legacy: Login tools, password manager location, and specific directions for social accounts.
- Key dates and revision history: When you wrote and last updated the LOI.
Step‑by‑step: How to create one
- Start with a short purpose statement: say it’s a companion to legal documents and non‑binding.
- Gather documents: Locate your will, trust, deeds, life insurance, business agreements, and recent financial statements.
- Make lists: Contacts, accounts, assets, and their locations. Use bullet points to aid quick scanning.
- Write the personal sections: Explain sentimental choices and the reasons behind distributions you anticipate.
- Add administrative instructions: Who should be notified, and where to find passwords, safe keys, and originals of documents.
- Review with professionals: Share the LOI with your estate attorney and financial adviser for completeness (not for legal enforcement).
- Save and distribute: Keep a signed original in a secure place and provide copies to your executor and a trusted family member.
Sample Letter of Intent (template)
Below is a practical template you can adapt. Keep it brief—one to three pages is often enough.
[Date]
Purpose: This Letter of Intent is a non‑binding companion to my will and estate plan. It explains practical instructions and personal wishes to help my executor and heirs carry out my intentions.
Personal message:
To my family — I want you to know [brief statement of values or feelings]. I hope this letter helps when decisions are needed.
Primary contacts:
- Estate attorney: [Name, phone, email]
- Financial advisor: [Name, phone, email]
- Executor: [Name, phone, email]
Important documents and where to find them:
- Will and trust: [Location / safe deposit box / attorney file]
- Life insurance: [Company name, agent, policy number or location]
- Deeds, titles: [Location]
Distribution notes for personal items:
- [Item] — Give to [Name] because [reason].
Funeral preferences:
- Preference: [burial/cremation/service type], music: [details], celebrant: [name].
Digital accounts:
- Password manager stored at: [location / service]
- Social accounts: [instructions]
Final note: Last updated: [date]. Signed: [Your name]
How to store and share the LOI safely
- Keep the original with your key estate documents (attorney’s file or a home safe).
- Provide a copy to your executor and to a trusted family member.
- Don’t rely on email alone for sensitive lists—use a secure password manager for logins and point the LOI to that manager rather than listing passwords in the LOI itself.
Common mistakes to avoid
- Treating the LOI as a will: It isn’t legally binding—don’t use it to change legal distribution.
- Overloading with sensitive data: Instead of listing full account numbers or passwords, point to where those details are stored securely.
- Leaving the LOI outdated: Review after major life events—marriage, divorce, births, deaths, or a move.
- Vague instructions: Use names and clear descriptions to avoid ambiguous directions.
Practical examples and outcomes
In my work I once helped a client whose handwritten LOI explained why a low‑value watch should go to a specific child; the explanation prevented a bitter dispute among siblings and preserved family stories. Another family’s LOI included funeral music and readings that transformed a stressful day into a meaningful celebration.
How an LOI interacts with estate taxes and legal documents
An LOI won’t change how assets are titled or taxed. For estate tax rules, filing thresholds, and forms, consult the IRS resources on estate and gift taxes (https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax). For consumer‑facing planning help, the Consumer Financial Protection Bureau offers clear guides on organizing documents and notifying family (https://www.consumerfinance.gov/). Always confirm tax or legal steps with a qualified professional.
Helpful internal resources
- For a broader view of planning basics, see our Estate Planning overview: “Estate Planning” (https://finhelp.io/glossary/estate-planning/).
- If your estate includes online accounts or crypto, read “Digital Estate Planning: Managing Online Accounts and Assets” (https://finhelp.io/glossary/digital-estate-planning-managing-online-accounts-and-assets/).
Frequently asked questions
Q: Is an LOI legally binding?
A: No. It’s persuasive but not enforceable; use formal legal documents (wills, trusts) for legally binding instructions.
Q: Should I have it notarized?
A: Not required. A dated and signed LOI carries more credibility; notarization may help prove authenticity but does not give legal force.
Q: How often should I update the LOI?
A: Review it after major life events and every 2–3 years.
Final checklist before you finish
- One‑page purpose statement and signature
- Contact list and document inventory
- Location notes for essentials (original will, trusts, insurance policies)
- Personal notes for heirlooms and funeral plans
- Revision history and a copy given to executor
Professional disclaimer
This article is educational and does not provide legal or tax advice. For binding estate documents, tax planning, or to ensure your LOI works with your legal plan, consult a qualified estate attorney and tax professional.
Author note
As an editor and adviser who has guided families in estate transitions, I encourage clients to use LOIs to preserve context and reduce conflict—paired always with properly drafted legal documents and professional advice.
