While it is important to have an updated estate plan, there is a lot of information that your heirs should know that doesn't necessarily fit into a trust or will or other components of an estate plan. The solution is a letter of instruction, which can provide your heirs with guidance if you die or become incapacitated.
A letter of instruction is a legally non-binding document that gives your heirs information crucial to helping them tie up your affairs. Without such a letter, it can be easy for heirs to miss important items or become overwhelmed trying to sort through all the documents you left behind.
Letters of instruction can be used for many different reasons, but one of their main uses is simply to lead the person who must settle your estate through the process step by step in plain language. Note that all of the information that a good letter of instruction should contain is covered in our estate planning binder that we provide our clients. This includes the following:
- A list of people to contact when you die or incapacitated such as lawyers, financial advisors, accountants, and insurance agents
- The location of important documents such as life insurance policies and grant deeds
- Passwords and PIN numbers for online accounts
- The location of safe deposit box along with the key
- A list of credit card accounts and other debts
- Instructions for a funeral or memorial service
- Your social security number and birth certificate
- List all financial account beneficiaries and their contact information
- You can state personal requests such as how you would like your beneficiaries to use their inheritance
- Many people also include an ethical will inside this letter. An ethical will is a document that allows you to pass down your values, beliefs and ideals to your loved ones.
Remember, this type of letter does not have to meet any kind of legal format or other formal requirements.