What Is a Letter of Instruction?
WHAT IS A LETTER OF INSTRUCTION?
A Letter of Instruction is a non-legally binding document that supplements your formal estate planning tools (like your will or trust). It offers practical information and personal details that can help your executor, family members, and other loved ones understand your wishes and manage your affairs more efficiently. While not legally enforceable, a Letter of Instruction can act as a roadmap during the estate administration process, providing clarity and reducing confusion.
The beauty of this document is that it can be updated at any time, without involving a lawyer. As life circumstances change—whether you acquire new assets or have different preferences for your funeral arrangements—you can easily revise it to reflect your current desires. However, it's important to note that the contents of your Letter of Instruction should not contradict the terms of your formal estate plan.
WHY DO YOU NEED ONE?
When life takes an unexpected turn, the last thing you want is to leave your loved ones scrambling to manage your affairs. From tracking down important documents to locating assets, navigating the complex world of estate administration can be overwhelming for grieving family members. One way to ease this burden is by creating a Letter of Instruction. This simple, informal document can provide essential guidance and help ensure that your wishes are followed, even after you're gone.
WHERE TO STORE YOUR LETTER OF NSTRUCTION
Your Letter of Instruction should be kept in a safe but accessible place. Consider including it with your other estate planning documents, such as your will and trust. It’s a good idea to provide a copy to your executor, attorney, and other trusted individuals. Make sure the document is updated regularly to reflect any changes in your assets and personal preferences.
INFORMATION TO INCLUDE
Here’s what you should consider including in your Letter of Instruction to ensure those you leave behind can best fulfill your wishes:
Funeral and Burial Instructions: Outline your preferences for funeral services, burial or cremation, and any prearranged plans. You may want to list specific funeral homes, clergy, and even songs or readings you’d like included. Additionally, provide details on any prepaid funeral arrangements or special requests for your obituary.
Location of Important Documents: Make sure your loved ones know where to find critical documents like your will, trust, property deeds, financial statements, birth and marriage certificates, and more. If these documents are stored in a safe or locked file, include the necessary access codes or keys.
Contact Information for Trusted Advisors: List contact details for your financial planners, accountants, attorneys, insurance agents, and any other professionals who manage aspects of your estate. These people can help your executor manage the estate more efficiently, including handling taxes, assets, and legal matters.
Asset List and Financial Information: Catalog all of your assets—everything from real estate and bank accounts to valuable personal items and investments. Include account numbers, the current value of assets, and any specific instructions regarding how you want them distributed.
Online Accounts and Digital Assets: In today’s digital age, it’s crucial to provide a list of your online accounts, including email, social media, cloud storage, and any digital media libraries. Specify who should manage these accounts and provide login information to ensure that your executor can access them if needed.
Outstanding Debts: Help your loved ones navigate any outstanding debts by listing creditors, account numbers, and the current balance for each debt. This will assist in settling your financial obligations efficiently.
Beneficiary Information: List the beneficiaries named in your estate plan, including full names, relationships to you, and contact details. This helps your executor ensure that all assets are distributed according to your wishes.
Pet Care Instructions: If you have pets, provide clear instructions on who should take care of them and any special needs they may have. Include contact information for their veterinarian, as well as any pet care routines.
Personal Property Distribution: Some states allow you to provide a list of tangible personal property you wish to leave to specific individuals. Even if your state doesn’t allow a separate document, you can still include a list of items you want to distribute to specific people, helping to avoid disputes over sentimental possessions.
Personal Messages: This is your chance to communicate personal messages to your loved ones, explain the reasoning behind certain decisions, or share your feelings. For example, if you made difficult decisions, such as excluding someone from your estate plan, explaining these choices can help minimize misunderstandings and conflicts.
WHAT TO AVOID INCLUDING
While a Letter of Instruction can provide valuable guidance, there are certain things it should not include:
Estate Plan Updates: The Letter of Instruction is not a tool for making changes to your will, trust, or other formal estate documents. Any changes to your estate plan must be made in accordance with legal procedures.
Contradicting Estate Plan Provisions: Ensure that the information in your Letter of Instruction does not contradict your formal estate planning documents. If there are conflicting instructions, it could lead to confusion and potential disputes.
WHERE TO GO FROM HERE
While a Letter of Instruction is not a substitute for formal estate planning documents, it serves as a valuable tool to help your loved ones navigate the complexities of estate administration with greater ease. By providing clear guidance on your wishes, important documents, and key contacts, you can make a difficult time just a little bit easier for those you leave behind.
To see how Cornerstone can help you with financial planning and your retirement portfolio, call our office at (775)853-9033 or click here.
Based in Reno, NV, Cornerstone is for individuals and families looking to grow wealth, protect and preserve their life savings, and plan for the distribution of their estate in a tax-efficient manner through a tailored strategy. Schedule a time to discuss your financial goals with us.
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