Ep. 287 – Estate Planning 101 – The Importance of a Letter to Your Heirs in Retirement

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In this episode of the Secure Your Retirement Podcast, Radon and Murs discuss the often overlooked but crucial topic of creating a letter to your heirs. This letter serves as an essential supplement to your estate planning documents and plays a significant role in ensuring a smooth transition for your loved ones. The episode highlights how this thoughtful approach can simplify the process, ease emotional stress, and transfer the peace of mind you’ve enjoyed during your retirement planning to your heirs.

Listen in to learn about why a letter to your heirs is more than just a nice gesture—it’s a critical tool in estate planning. Radon and Murs delve into the specifics of what such a letter should include and the ways it complements other estate documents like wills and trusts. They also share personal stories of how a well-prepared letter can make a significant difference during challenging times.

In this episode, find out:

·      Why a letter to your heirs is essential to estate planning.

·      How this letter can simplify the process for your executor or trustee.

·      What key details to include in your letter to create clarity.

·      The importance of avoiding quick decisions on inheritance.

·      How to ensure peace of mind is passed along to the next generation.

Tweetable Quotes:

·      “A letter to your heirs is not just a courtesy; it’s a vital part of estate planning that provides peace of mind and clarity.” – Radon Stancil

·      “This letter simplifies the emotional and logistical challenges for your loved ones, allowing them to navigate your estate with confidence.” – Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Radon Stancil:	Welcome everyone to Secure Your Retirement Podcast. We’re certainly happy to have you with us. We are, I will say, excited to talk about something that you might not think is exciting to talk about, but it just is a tool that we think is extremely important. Unfortunately, a fact of life is that life ends and we may have to find or not find ourself. Our heirs may find themselves in a situation having to deal with our estate, and we all know that that is a part of life and that is a part of what things occur. That’s why we do estate planning. So what we wanted to talk about today though is not only having an estate plan, because we’ve done a few episodes on estate planning, and we believe that is extremely important. I mean, the basics are, we always tell people the absolute basics are that you have a will, a durable power of attorney, healthcare, power of attorney, and your HIPAA forms.
	Those are like absolute, everyone should have them. And then in addition to that, we believe that it’s important that you have a revocable living trust if necessary. That is definitely something that you would want to consider, but that’s a big document. And if he gets it, in fact, I just was working with a daughter of a client and they’re going through this. Murs has just dealt with somebody going through this, and it is overwhelming. I mean, think about it. Not only are you dealing with an estate plan, maybe you don’t know where everything’s at, but you’re also, it’s an emotional time. And so what we want to talk about today is just kind of doing a summary letter that would go with your estate plan. That just puts everything into a nice little picture. And yes, you got to have all the details of the will.
	Yes, you got to have all the details of the trust. But what we’re talking about is having a summary, a letter written from you to the heirs in a way that just lets them know, Hey, everything is okay, and I don’t have to worry. And as our concept is everything for us is about having peace of mind. So we’re going to kind of walk you through what we have built out, which is a sample letter to attach to your estate plan that we hope will give you some ideas. And I’ll tell you at the end how you can get a sample of this if you would like. So Murs, could you start us off here? Give us the basis of this letter. That’s the letter to the heirs, and we’ll walk our ways through it.
Murs Tariq:	Yeah, and I think, like you said, I’ll reiterate the importance of this letter is it just makes it a nice summary. Remember, you’re no longer here and someone you have appointed as the executor or the trustee has to figure out how do we make this transition happen? Where do I go for all these different things? And it can be very overwhelming. So the letter opens up pretty much saying, Hey, I’m writing this letter to help you understand the plans I’ve put in place. Right? Oftentimes that conversation never happens because it’s a tough conversation to go through and nobody wants to talk about death. And sometimes it’s as simple as the conversation is, Hey, I’ve got beneficiaries. When that time comes, you’ll figure it out, right? Everything is in place. Well, what’s in place? That’s the big question. So the letters really directed to plans in place to help manage my estate, finances, also healthcare in the most organized and thoughtful way possible. My goal is to make everything as clear and straightforward for you as I can. So there’s some intention behind this letter to simplify this massive transition, this very difficult transition, and that’s how the letter opens up. I’ve worked with peace of mind wealth management to set up a comprehensive plan that covers aspects of my estate. So you’ll have everything you need to handle my affairs with ease. To me, that’s rather powerful.
Radon Stancil:	Yeah, I think it’s extremely powerful. Now, again, we’re writing this sample letter. So we’ve said that it’s pizza mind wealth management, but the idea is is that we would let them know, Hey, this is who you would go talk to in the second part of this letter or the second paragraph of the letter. It says, here is a very simple overview of my estate plan. In this sample letter, it says, I have a will. I have a revocable living trust, and these documents lay out exactly how I want things to go. And then it lets them know, in this case, peace of mind. Wealth management has a detailed peace of mind roadmap. Now, what we do for our clients is that we, our peace of mind roadmap includes every aspect of someone’s life. So it is not just investments, although investments are important, but it is where they’re getting their income from.
	How is their tax plan? What is the estate plan? What about healthcare? What are all of those different elements? And so that roadmap contains every aspect of their life. So it’s saying, Hey, they’ve got all this. It’s all been organized. It is all there. It’s going to help navigate you through every aspect of what you are going to now need. Because thought it all through, there’s nothing here been put to chance. It is all designed to make sure that my heirs get exactly what and how I think it ought to be the best after many strategy sessions. So that’s just again, right in the beginning of the letter, we’re trying to put everybody at ease, and then we got to go through the next step, which is where’s everything at?
Murs Tariq:	Right? This section is all around account and asset organization. The beginning of the letter says, Hey, we’ve got everything summarized for you. Here’s where to go. Here’s who to talk to, but here’s what I have. Here’s where things are and how it’s all organized from investment accounts, what brokerage firm they’re at, and giving you the comfort that there are beneficiaries already attached. So you won’t have to go through probate on certain types of accounts like brokerage accounts, and which we would call A TOD transfer on death or a pay on death or a designated beneficiary plan. Retirement accounts, those come with beneficiaries, traditional IRAs, Roth IRAs, any other types of retirement accounts beneficiaries attached to avoid that probate. So it’s comforting again, and other alternative accounts like annuities or even as simple as, Hey, here’s where I bank. Here’s my checking accounts and savings accounts, and I have taken the time to put the TODs, the pods in place so that it transfers on death and it doesn’t go through.
Radon Stancil:	Did you say what TOD stands for?
Murs Tariq:	Yeah. Transfer on death or payable on death. And so we don’t have to worry about, well, is this asset going to go through the probate process? Just a quick little story, like Radon said earlier, because of the world that we work in and us specializing in retirement planning and being every year, it’s just natural that we have someone go through this transition. Death is inevitable. And years prior, I remember stories and hearing the difficulties of one of the spouses was rather private or they kept it all hidden, or maybe the other one just wasn’t involved and everything was working well, and that time came and they didn’t know how to go find it. They didn’t know where to go. And so we as the advisor had to become a bit more of kind of a sleuth to help them think through, well, here’s a way that you can find things.
	So show me the tax return. The tax returns tells us a lot of different things about income and assets. Go look through your bank transactions and you’ll see credit card payments. You’ll see the subscriptions that they had. You’ll see the bills that were being paid, and you have to kind of work backwards to figure out where things interest was coming from, where income was coming from. This process makes it a whole lot simpler because in this letter that is going to be curated to our clients, it lays it out, and that’s going to be an ongoing letter because things do change here and there. But the idea is, is that it makes it simple for the transition to happen.
Radon Stancil:	And then what we’re also in this letter, and we think this is important, but yeah, you’re letting them know that they have comprehensive support. If you’re working with a wealth management firm and they don’t have this, then that’s a whole different topic that we could have. But our clients, what it tells them in this next is with peace of mind wealth management, they have helped me organize the entire plan. They know every area of the plan. So what you need to do to the air contact, peace of mind, wealth management, they’ve got my peace of mind roadmap. They know exactly what’s going on. They’re going to help you in every aspect. And there’s a little bit of a warning there. It tells them, Hey, before you do anything with these accounts, make sure you talk to someone because you don’t want to make a mistake because it could create a big tax problem.
	So it’s saying, take a minute, get in touch with the people that help me put together my roadmap. Help. Let’s make sure that they understand and you are all on the same page. And then again, it walks them through. Please keep it in mind. Don’t take action before this happens. So it’s kind of a warning to them, right? In these bullet points. And it also tells them, because in our situation it says, you also have an access. You have access. I’ve granted you access. If I were to pass away to my digital plan so that they have everything together, all of it extremely organized. They’re not having to look for anything. They don’t have to go find out where accounts are or anything of that nature. And just again, the whole idea behind this is our client has had peace of mind throughout their retirement planning process, and now we want to make sure that that peace of mind transfers just like the assets, the peace of mind transfers to that next generation or whoever that heir is. And I will tell you the whole concept of having all of these things, having a peace of mind roadmap before I pass away, it creates that peace of mind so that we don’t have to worry. We can just relax and have a great, great retirement. Anything at all there Murs that you would like to add?
Murs Tariq:	Yeah, I think I would want to come back and stress that we don’t want to make quick decisions on inheritance and just say, well, I just get the money, so let me just fill out the form and take the money. Some assets are taxed differently on inheritance. Some assets are not taxed at all. There’s reasons to not take the inheritance upfront. There’s reasons to take it over time. There’s reasons to also ignore it all together and give it to the next generation. So there’s so many different strategies that we would want to be thinking through based off of that inheritor, that error in their situation as to what makes sense for them, rather than just saying, Hey, it’s free money. Let me take it, and if I pay some tax, well, I’ll pay some tax. I still end up with money. I don’t think that’s the right way to approach it. There’s strategies to maximize that money and minimize that tax burden.
Radon Stancil:	Alright, if you’d like to see a copy or copy of this sample letter, we’re glad to share it with you. Just reach out to us here at the office. You can go to the website, go to the top right hand corner, click on schedule call. We’ll walk you through anything that you might need. We have no problem sharing this letter with you just so you’ve got an idea of a format. Our goal is to make sure, again, everybody has peace of mind as they have to go through this entire process. Thank you very much. We’ll talk to you again next Monday.