Including a letter of instruction in your estate plan is a simple yet powerful way to communicate your personal wishes to your family and executor outside of formal legal documents. While not legally binding, the letter can serve as a road map to help those managing your estate carry out your wishes with fewer questions or disputes.
Contents Of Your Letter
What your letter addresses largely depends on your personal circumstances. However, an effective letter of instruction must cover the following:
Documents and assets. State the location of your will and other important estate planning documents, such as powers of attorney, trusts, living wills, and health care directives. Also, provide the location of critical documents such as your birth certificate, marriage license, divorce documents, and military paperwork.
Next, create an inventory — a spreadsheet may be ideal for this purpose — of all your assets, their locations, account numbers, and relevant contacts. These may include, but aren’t necessarily limited to:
- Checking and savings accounts
- Retirement plans and IRAs
- Health and accident insurance plans
- Business insurance
- Life and disability income insurance
- Stocks, bonds, mutual funds, and other investment accounts
Don’t forget about liabilities. Provide information on mortgages, debts, and other loans your family should know about.
Digital assets. At this point, most or all of your financial accounts may be available through digital means, including bank accounts, securities, and retirement plans. It’s critical for your letter of instruction to inform your loved ones on how to access your digital accounts. Accordingly, the letter should compile usernames and passwords for digital financial accounts as well as social media accounts, key websites, and links of significance.
Funeral and burial arrangements. Usually, a letter of instruction will also include particulars about funeral and burial arrangements. If you’ve already made funeral and burial plans, spell out the details in your letter.
This can be helpful to grieving family members. You may want to mention particulars like the person (or people) you’d like to give your eulogy, the setting, and even musical selections. If you prefer cremation to burial, make that abundantly clear.
Provide a list of people you want to be contacted when you pass away and their relevant information. Typically, this will include the names, phone numbers, addresses, and emails of the professionals handling your finances, such as an attorney, CPA, financial planner, life insurance agent, and stockbroker. Finally, write down your wishes for any special charitable donations to be made in your memory.
Express Your Personal Thoughts
Your letter of instruction complements the legal rigor of your estate planning documents with practical and personal guidance. Indeed, one of the most valuable functions of a letter is to offer personal context or emotional guidance. You can use it to explain the reasoning behind decisions in your will, share messages with loved ones, or express values and hopes for the future.
We’re here to help with the financial and tax details of your estate plan—contact our advisors.