What Is a Letter of Instruction and Do I Need One?
Simply put, a letter of instruction is a cheat sheet for anyone involved in settling your affairs. Unlike a will, this letter has no legal authority. However, it can provide an easy-to-understand explanation of your overall estate plan to your executor and lay out your wishes to your family for things not covered by the will.
A letter of instruction can help to simplify a complex inheritance structure for your heirs. But you don't need to have a complicated estate to benefit from one. For example, your letter of instruction could outline who should get items that aren't necessarily valuable, but might be sentimental. It can also make things easier on your family by laying out a complete picture of your assets as well as listing the locations of important documents.
One great advantage is that, because these letters aren't legal documents, you can include your own personal wishes and messages to your family. 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 letter of instruction may be used to lead the person settling an estate through a step-by-step process in plain language.
- The document can augment your regular will or leave personal messages for your loved ones.
- As with any other estate-planning document, a letter of instruction should be updated at least annually and kept in a safe place. It should be easily accessible by your relatives or executor.
What to Include in a Letter of Instruction?
A letter of instruction, sometimes called a letter of intent, provides specific information regarding personal preferences in medical or funeral care, as well as 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, using 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
- The whereabouts of any tangible assets that are not readily accessible
- Necessary information about 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
- The location of legal and financial documents such as bank and social security statements, tax returns, birth and marriage certificates, divorce and citizenship papers, Social Security card, titles and/or deeds for any real estate properties, wills, and trusts
- A list of all financial account beneficiaries or other estate beneficiaries and their contact information, if necessary
- The location of all safe deposit boxes and their keys
- The contact information of any debtors, such as mortgages, credit cards, and car loans
- Details about and contact information for any and all insurance coverage, especially life insurance
- Instructions for the care and placement of any pets
Keep Your Letter of Instruction Up to Date
This letter can also outline more personal desires: for instance, details about where you want to be buried and the kind of funeral you want. You can specify the location, funeral home, and even the type of flowers you would like, or whether you would like your body or ashes to be displayed at the ceremony.
You can also use the letter to voice 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 can also state preferences about what happens to your digital footprint such as instructions for your social media accounts.
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 medical or healthcare 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 even use these letters as a chance to write their own obituaries.
The Bottom Line
A letter of instruction provides a helpful guide 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.