Creating a trust is a significant step in estate planning, but it’s often just one piece of the puzzle. Many individuals, alongside their trust documents, find immense value in a separate “side letter of instruction.” This letter, unlike the formal, legally binding trust, offers a space for more personal guidance and details that might not fit within the rigid structure of a trust. Steve Bliss, as an Estate Planning Attorney in San Diego, often recommends these letters to clients as a way to streamline the administration process and ensure their wishes are truly understood. Approximately 60% of clients who establish trusts with Steve Bliss also opt to create a side letter, highlighting its growing popularity as a complementary estate planning tool. It’s crucial to understand the difference: the trust dictates *how* assets are distributed, while the side letter explains *why* and offers context.
What information should be included in a side letter?
A side letter isn’t about legal directives; it’s about providing clarity and context. You can detail specific intentions behind certain bequests – perhaps a cherished family heirloom is meant for a particular niece because of a shared passion, or a charitable donation reflects a deep-seated belief. Practical information is also valuable, such as the location of important documents – insurance policies, digital assets, or even a list of trusted advisors. Think about things your successor trustee might need to know to navigate the estate administration process smoothly. It could be information about recurring bills, property maintenance, or even the location of safe deposit box keys. Furthermore, you can express your overall philosophy regarding wealth and family values, offering a guiding principle for how your estate should be managed in the future. Remember, this is your voice speaking from beyond, providing guidance and reassurance to those you leave behind.
Is a side letter legally binding?
This is a critical distinction. A side letter is *not* legally binding. It’s a statement of your wishes, but it doesn’t have the force of law. Think of it as a “road map” rather than a contract. However, while not legally enforceable, a well-written side letter can significantly influence how a successor trustee interprets and implements the terms of your trust. It provides context and demonstrates your intentions, making it more likely that your wishes will be honored. Successor trustees are generally expected to act in good faith and adhere to the grantor’s intent, and a clear, thoughtful side letter can provide valuable evidence of that intent. While a trustee isn’t legally *obligated* to follow every detail in the letter, they’ll likely give it considerable weight, especially if it aligns with the overall spirit of the trust.
How does a side letter differ from a trust amendment?
A trust amendment is a formal, legally binding change to your trust document. It requires specific language, proper execution (notarization and witnessing), and must be carefully drafted to avoid unintended consequences. A side letter, on the other hand, is informal and flexible. You can update it as often as you like without the need for legal formalities. If you want to *change* how your assets are distributed, you need a trust amendment. If you want to *explain* why you made certain decisions in your trust, a side letter is the perfect tool. Imagine a client, Mr. Henderson, who left a significant portion of his estate to his local animal shelter. While the trust clearly stated the amount and beneficiary, he wanted to explain his lifelong passion for animal welfare and his belief in the shelter’s work. A side letter allowed him to convey that emotional connection, adding depth and meaning to his charitable bequest.
What happens if my instructions are unclear or conflict with my trust?
This is where clarity and consistency are crucial. If your side letter is vague or ambiguous, or if it directly contradicts the terms of your trust, it may not be given much weight. A successor trustee is legally obligated to follow the terms of the trust, so if there’s a conflict, the trust will prevail. However, even in such cases, the side letter can still provide valuable insight into your intentions, helping the trustee interpret the trust in a way that aligns with your overall wishes. Steve Bliss emphasizes the importance of working with an attorney to ensure that your side letter is clear, concise, and consistent with your overall estate plan. He’s seen cases where poorly written side letters have created confusion and disputes among beneficiaries, ultimately leading to costly legal battles.
Can I include digital assets in my side letter?
Absolutely. In today’s digital age, it’s essential to address your digital assets – online accounts, social media profiles, cryptocurrencies, and digital photos – in your estate plan. Your side letter is an ideal place to provide instructions on how you want these assets handled. You can list your account usernames and passwords (though security is a concern – see below), specify who should have access to your social media profiles, or indicate whether you want certain digital content preserved or deleted. It’s important to remember that access to digital assets often requires legal authority, so your successor trustee may need to take steps to obtain access even with your instructions. Additionally, consider using a digital asset management service or a secure password manager to protect your sensitive information.
What about security and privacy concerns with a side letter?
This is a valid concern. Unlike a trust, a side letter isn’t typically filed with the court, but it will be shared with your successor trustee and potentially other beneficiaries. Therefore, avoid including highly sensitive information that you wouldn’t want others to see. While listing usernames and passwords can be helpful, it also poses a security risk. Consider using a separate, secure document to store this information, and instruct your successor trustee to keep it confidential. Steve Bliss advises clients to strike a balance between providing helpful instructions and protecting their privacy. He’s seen cases where overly detailed side letters have inadvertently created opportunities for fraud or identity theft.
A tale of overlooked digital assets
Old Man Tiberius was a bit of a recluse, a man who’d made a fortune in the stock market and then vanished from public life. He had a meticulously crafted trust, but he never bothered with a side letter. After he passed, his successor trustee discovered a hidden treasure trove of digital assets: a substantial cryptocurrency portfolio, a popular online art gallery, and a collection of rare digital collectibles. Because there were no instructions on how to access or manage these assets, the trustee spent months navigating legal hurdles and technical complexities, incurring significant expenses and delaying the distribution of the estate. It was a frustrating and avoidable situation, all because of a simple oversight.
A successful estate administration with clear instructions
Mrs. Eleanor Ainsworth, on the other hand, was a proactive estate planner. Alongside her trust, she created a detailed side letter that included a list of her digital assets, along with instructions on how to access and manage them. She also included a note explaining her passion for digital art and her desire to see her online gallery continue to thrive. When she passed away, her successor trustee was able to seamlessly administer her estate, thanks to the clear and concise instructions in her side letter. The transition was smooth, the beneficiaries were satisfied, and Mrs. Ainsworth’s legacy lived on, exactly as she had envisioned. It’s a testament to the power of thoughtful estate planning and the value of a well-crafted side letter.
About Steven F. Bliss Esq. at San Diego Probate Law:
Secure Your Family’s Future with San Diego’s Trusted Trust Attorney. Minimize estate taxes with stress-free Probate. We craft wills, trusts, & customized plans to ensure your wishes are met and loved ones protected.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Probate Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Map To Steve Bliss at San Diego Probate Law: https://g.co/kgs/WzT6443
Address:
San Diego Probate Law3914 Murphy Canyon Rd, San Diego, CA 92123
(858) 278-2800
Key Words Related To San Diego Probate Law:
| California living trust laws | irrevocable trust | elder law and advocacy |
| charitable remainder trust | special needs trust | trust litigation attorney |
| revocable living trust | conservatorship attorney in San Diego | trust litigation lawyer |
Feel free to ask Attorney Steve Bliss about: “What’s better—amendment or restatement?” or “How does California’s community property law affect probate?” and even “Should I name a bank or institution as trustee?” Or any other related questions that you may have about Probate or my trust law practice.