Last Updated on June 11, 2024

Thank you to Yaacov Rothman for the inspiration and several of the ideas behind this letter. You can find Yaacov’s 2023 update to his letter to his wife, here (Hebrew).

While I generalized some numbers and removed some detail, I tried to share as much information from of my own personal letter as possible. Please note that everything mentioned below is not personal advice and may not be relevant or appropriate for as you write your own letter.

A letter like this should include practical steps your spouse or family would need to take after your death, an estimate of what the family income will be and where it will be coming from, a specific outline for a family spending plan, and some tips for managing family savings going forward. You should update your letter once a year and in the event of a major change.

Introduction

My love,

I want you to feel as secure financially when I’m gone as I hope you felt during our wonderful life together.

My goal in writing this is to lay out a simple roadmap to managing our finances. Managing money well doesn’t require a lot of effort or decision making. Just follow these steps.

Of course, there will always be unexpected situations that arise. You may also feel stress and concern, especially if the share market crashes or the economy turns sour. Whenever you have a question, reach out to my partner Aaron and trust his guidance.

During our life together we had your salary and my business. We used these to cover our expenses and save every month.

The plan below assumes you and the kids can live off our assets and insurance policies. There is no need for you to continue to work (if you choose not to) or to save money monthly for the future.

Ready? Let’s dive in.

Immediately after I pass away

Most importantly, nothing needs to be dealt with within the first few weeks. All of the accounts and investments will run themselves.

As you know, we keep 40,000 ILS in cash between our bank accounts (which you should maintain going forward). This should be sufficient to cover any immediate costs relating to burial.

If more money is required in the first few weeks, if we have a savings account at the time in a Keren Kaspit under my name with Mizrahi Bank, you can sell/liquidate these and replace them later with insurance payouts. If not, you can login to your Interactive Brokers account and sell however much is needed. The passwords are all saved in Bitwarden and you have the master password. Aaron can help you with the buttons to click.

After the first month

We’ll need to process the insurance claims in order to receive what is owing to you:

Pension life insurance

This will pay you a monthly income for the rest of your life, plus an amount for the kids until the youngest turns 21 (see below for amounts).

In order to claim contact <agent> from Cover on <number, email>.

Private life insurance

This will pay you a lump sum.

In order to claim contact <agent> at Michelle Binovitch’s office on <number, email>.

Mortgage life insurance

This will pay the bank and the mortgage will disappear.

In order to claim contact Libra www.lbr.co.il.

Bituach Leumi – קצבת שאירים

This will pay you a monthly amount for the rest of your life. See the table below.

You should apply for קצבת שאירים for yourself and the kids here.

Probate the will

The will needs to be probated (submitted) so that it can be put into effect. Best to have a lawyer do it for you. You can contact Miriam Shatsky on <number, email>.

Many of our accounts are in my name. Make sure you reference the list that I consistently update in order to ensure that all accounts are transferred to you.

Keren Yachad

Keren Yachad will establish a fund with 50K – 150K ₪ for each child. This money will be invested by the Keren Yachad investment committee and will be available to the children for wedding / higher studies or when they reach 30 years of age.

Contact Keren Yachad here.

A new monthly budget

Income

Here is what your monthly income should look like. The goal of this plan is to allow you to quit work if you wish. If you decide to continue your career, then there will of course be money to spare.

Source	Amount after tax	Notes
Kitzva from Pension – Widow	13,000	13,000 before tax. First 9,430 is tax free. Tax points cover the rest.
Kitzva from Pension – Children	8,500	First 9,430 is tax free. Goes away when the last child turns 21.
Bituach Leumi	5,013	Tax free. Assumes 3 kids. The תוספת וותק in this number assumes I paid Bituach Leumi for 10 years.
Total	26,513

These kitzbaot increase with inflation each year.

The table doesn’t include:

1. Our savings and private life insurance payout. More on these below.
2. Any income you may want to earn

Expenses

The spending plan we made together comes to 26,000 ILS. As such it should be covered by the income plan above.

This spending plan includes all basic expenses, seasonal items such insurance, car maintenance and registration, large purchases, gifts, summer camps, and donations. It also adds on a weekly cleaner and 1000 ILS a month for a babysitter to help a few evenings a week. Finally it includes savings each month to replace the car every ~7 years and 20,000 ILS for a vacation each year.

There are of course no mortgage payments as the mortgage has been paid off by the mortgage life insurance.

This should be a very comfortable budget, but doesn’t include too many extravagances. For those, read on.

Managing investments

My pension lump sum will no longer exist as it has been turned into the monthly kitzba.

Other than that savings in our private investment accounts and Kranot Hishtalmut. In addition there is your pension balance and my private life insurance. You can see our current net worth <here>.

Our savings, together with my private life insurance payout, will leave you with 1.5M ₪.

Managing this money

Everything in my name will eventually be transferred to you. Keep things simple – you can invest everything in Interactive Brokers in one fund called VT (Vanguard Total World Stock Index Fund ETF).

As a reminder:

To invest new money: create a deposit notification in IBKR, transfer from Poalim, and then buy units in VT (IBKR will automatically convert the ILS to USD since you have a “Cash” account).

To withdraw money: sell units in VT, convert to ILS, withdraw from IBKR to Poalim.

This fund invests in 9000 companies on your behalf and is globally diversified. Currently 60% is invested in US companies and 40% around the rest of the world. The fund adjusts regularly to keep itself balanced.

Try to ignore the ups and downs of the market. If you are worried, consult with Aaron.

You will receive cash into the Interactive Brokers account from dividends each quarter. Set a reminder to log in to Interactive Brokers and buy VT with any cash in the account.

If you have any spare money from work or otherwise, transfer it to Interactive Brokers and invest in VT.

Using this money

In your mind set aside about 1M ₪ as future gifts for the kids to help with weddings and property. Leave this invested and it will grow over time.

The 500,000 ₪ remaining can be used for extras beyond the budget we created. A good rule of thumb is that you could withdraw 5% per year (25,000) and in 80% of scenarios the money will last for more than 30 years. We can feel comfortable with 80% probability since your basic needs are already covered.

You can use this money for anything you want or need! In some years it may be for a large vacation (beyond the 20,000 ₪ yearly in the regular budget), otherwise for Bar Mitzvah, braces, driving lessons or indulging.

This plan will require a change of mindset. Up to now we’ve been in the “accumulation” phase of our wealth building. Now you’re in the “decumulation” or “distribution” phase. You don’t have to save money each month.

Preparing to spend (short-term investing)

If you anticipate needing large sums from savings (either to pass over to the kids or for yourself), try to plan 1-2 years in advance.

As long as the market hasn’t just gone through a major crash, you should pull the amount out of the market and convert to shekels 18-24 months before needing the money. You can store it in a Bank Pikadon and earn some interest.

This removes market risk and currency risk as you get close to needing money.

Taxes

Tax Filing

You will need to file taxes in Israel (since you have investments outside of Israel) and in America each year. You should file US taxes with SimpleTax and Israeli taxes should initially be filed through my accountant Danny Friedman, <number>. Once my business is closed, you could consider saving some money by filing through Alfie.

US Gift Tax

Since you and the kids are American, you have to be aware of the gift tax limitations. In 2024 you can give $13.61M over your lifetime without paying tax. In addition, you can give $18,000 to any person without it counting towards your lifetime exemption.

Be aware of these limits when planning gifts to our children. You can give $36,000 to a child and their partner ($18K x2) in any year without it counting towards the lifetime exemption.

In case you become rich in the future, try to generally limit your use of the lifetime exemption. In saying that, don’t worry about it too much. You can consult with a US accountant for guidance.

—

<Some personal final words.>

Love Nadav