If you're looking for a way to simplify a complex inheritance structure for your heirs or just want a way to stick it to Aunt Martha one last time, then a letter of instruction is what you need. Unlike a will, this letter has no legal authority. What it does is provide an easy-to-understand explanation of your overall estate plan to your executor. It serves as a cheat sheet for anyone involved in settling your affairs and provides a ready point of reference.
One great advantage: Because these letters aren't legal documents, you can include your own personal wishes and messages to your family.
- Letters of instruction aren't legal documents, so you can include your own personal wishes and messages to your family.
- One main use of a letter of instruction is to lead the person settling an estate through a step-by-step process in plain language.
- The letter of instruction can augment your regular will or leave personal messages for your loved ones.
Here's everything you should include in your letter of instruction, and an overview of what it can and can't do for you.
A Simple Remedy
A letter of instruction, sometimes called a letter of intent, provides specific information regarding personal preferences in medical or funeral care, or details concerning dispersion or care of personal assets that legal documents may not be able to outline. Letters of instruction can be used for many different reasons, but one main use is simply to lead the person settling your estate through the process, step by step, in plain language.
A letter of instruction has no legal authority, but it can provide an easy-to-understand explanation of a person's overall estate plan to their executor.
A good letter of instruction should contain the following information:
- A complete list of all assets, both liquid and illiquid
- The whereabouts of any and all tangible assets that are not readily accessible
- The names, passwords, PIN numbers, and account numbers of all liquid assets, including bank, brokerage, retirement, and investment accounts
- The names and contact information of any bankers, brokers, attorneys, or other professionals who handle your assets
- Informal information regarding the dispersion of assets, such as who would get a sentimental possession or heirloom (the will may state that these articles are to be distributed according to the letter)
- Preferred charities for donations, if they are expected instead of flowers
- Location of most recent copies of all financial and Social Security statements, tax returns and legal documents such as wills and trusts. You do already have a will, of course.
- List of all financial account beneficiaries and their contact information, if necessary
- The location of all titles and/or deeds for real estate property, rental property, oil and gas leases, and so on
- Your Social Security number and birth certificate
- Location of all safe deposit boxes and their keys
- Any divorce and/or citizenship papers, or applications thereof
- Contact information of any debtors, such as mortgages, credit cards and car loans
- Contact information for any and all insurance coverage, especially life insurance.
- Care and placement of any pets. You can even set up a pet trust, if needed.
- Contact information for all retirement account or estate beneficiaries
Make the Letter Your Own
This letter can outline more personal desires: for instance, details about where you want to be buried and the kind of funeral you want. You can specify location, funeral home—even the type of flowers you would like, or whether you would like your ashes to be displayed at the ceremony. You can use the letter to voice other personal requests that may be inappropriate for a will or trust, such as a general sentiment about how you would like your heirs to use their inherited assets. You could even tell your aunt you'd prefer she not attend your funeral wearing her blue hat with the giant bird.
Another advantage is that you can use the letter to expand on your living will, elaborating on the medical conditions under which you would like to be taken off of life support in more detail than is permitted in a healthcare or medical power of attorney. Many people also include an ethical will—a document that allows you to pass down your values, beliefs, and ideals to your loved ones—inside this letter.
Remember, this type of letter does not have to meet any kind of legal format or other formal requirements: It can be handwritten on plain notebook paper and kept in a file drawer, if you like. In a letter of instruction, anything goes. Micromanagers can use these letters as chance to write their own obituaries.
The Bottom Line
A letter of instruction provides a shortcut for those who will have to settle your affairs once you are gone. As with any other estate-planning document, it should be updated at least annually and kept in a safe place where it is accessible by your relatives or executor. While this letter is not required in any technical sense, it can serve as a final gesture of consideration for those you have elected to settle your affairs.