Protect your family with a letter of last instruction

May 1st, 2019

A letter of last instruction is an informal letter that provides information regarding your personal finances, locations of assets, and a variety of other things that can be managed through the letter. Although it is not binding, it is a supplemental letter to provide information to a doctor’s survivors concerning personal, business, and financial matters.

Here are five parts that each letter should contain to help loved ones work through one of the more difficult times in their lives.

contacts and funeral wishes

The first part of the letter outlines the individuals who should be contacted upon the death of the doctor, as well as information to begin funeral plans. If a mutual assistance group has been created for the purpose of assisting with death or disability, the group should be activated to work part time until the practice can be sold. Trusted staff members should be included so they can be briefed on the situation and maintain as much stability in the practice as possible.

In addition to contact information and names for the people above, a doctor drafting a letter of last instruction should outline who he or she wants to officiate, serve as pallbearers, and any information that will help to organize a final service. If the doctor owns any prepurchased arrangements or burial plots, this should be referenced.

Financial details

This section contains the vital elements of the family finances and how to achieve organization amid the chaos. Some things that should be included are the location of the original will, trust, and any other estate planning document; the information necessary for a death certificate in that jurisdiction; and the location of birth certificates, marriage certificates, and Social Security cards. Additionally, some situationally dependent documents, such as divorce papers, naturalization documents, and military discharge documents, should be included as well.

After a provision regarding where documents can be found, the location of all bank accounts, safe-deposit boxes (along with a list of contents), and registration and title for any assets should be outlined. This information should mirror a personal financial statement or individual balance sheet and can be incorporated by attachment to the letter.

All insurance policies, along with all vital information relating to the policies, should be included, along with pension benefits, Social Security benefits, and retirement accounts. If there are any personal contacts relating to individual insurance policies or broker relationships, this should be included as well.

Finally, contact information for the doctor’s CPA, attorney, financial advisor, and any other professionals of influence should be included, along with the contact information for executors and trustees named in the documents.

business entities, property

Similar to the need to provide additional information for accounts, information regarding each entity the doctor owns, including partnerships, corporations, and LLCs, is essential. Include the name, address, telephone number, and email addresses of those with whom the doctor is in business, and include any information regarding buy-sell agreements related to them, along with any underlying insurance policies used to support the buy-sell agreements.

Descriptions of property, along with deed information, mortgage information, and a summary of property taxes, interest rates, and property managers for any rental properties, are essential to understanding the extent of the real estate in the portfolio.

passwords and digital wishes

In an increasingly technological world, one’s web presence is important. Provide updated schedules of passwords on a regular basis that allow loved ones to access digital content without having to contact businesses and inform them of the doctor’s death. Outline wishes as to whether or not online social media should continue in memoriam, or if the online profiles should be eliminated upon passing. This is particularly important for larger social media websites, such as Facebook, which can be incredibly difficult to gain access to if passwords are unknown at death.

personal property memo

Even if a doctor’s state does not recognize tangible personal property memorandums as a legally binding way to transfer property to family, maintaining a household inventory and appraisal list of assets, along with who is intended to receive each piece of property, is a great way to limit infighting and bickering among surviving family members upon a doctor’s death.

Andrew Tucker, JD, Cfp, CPa, and John K. McGill, JD, MBA, CPA, provide tax and business planning for the dental profession and publish The McGill Advisory newsletter through John K. McGill & Company Inc., a member of the McGill & Hill Group LLC. It is your one-stop resource for tax and business planning, practice transitions, legal, retirement plan administration, CPA, and investment advisory services. Visit mcgillhillgroup.com.

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