Planning Your Estate With A Letter Of Instruction

Accountancy Resources

Planning Your Estate With A Letter Of Instruction

Inheritance Author: Admin


Planning for an eventual death is not something most people want to address or even think about, so many people avoid planning altogether until it is too late. Others may think estate planning is useless because they may not have enough money or assets to feel that an estate plan is necessary. Whether or not a significant amount of assets or money is involved, estate planning can provide guidance and peace of mind to the loved ones we leave behind. We often dismiss an estate plan as something we do not need to do for ourselves for a number of reasons, but perhaps more people should consider estate planning as something to do for our loved ones and not for ourselves.

Families are in a state of grief, and often shock, after the death of a family member, and even the brightest individuals may have trouble making decisions and carrying out the wishes of loved ones in this time of grief. The greatest gift we can leave behind for loved ones during this time is guidance. That guidance is often best given through a Last Will and Testament (“Will”) and a Letter of Instruction (“Letter”).

What Happens When Someone Dies Without a Will?

It is important to understand that if a person dies without a Will, the probate court in the state in which they live will decide how their assets are distributed. No family members or heirs will have any say in what happens. For this reason alone, having a Will is necessary to ensure loved ones are taken care of and wishes are carried out. However, a Will alone simply provides loose guidance. A Letter of Instruction may be necessary, along with the Will, to provide clear and concise direction to family members and heirs and to make detailed wishes known.

Purpose of the Letter of Instruction       

A Letter of Instruction may contain details not typically found in a Will and may help fill the gaps between the Will and final wishes. The letter should be placed along with the Will and family members should be made aware of it. The Letter is best suited to provide guidance on specific issues and provide the necessary information, such as:

  • Names of attorney, financial advisor, insurance agent, business associates, or other important contacts.
  • Location of important documents (i.e. tax returns, insurance policies, birth certificate, deeds, social security card, etc.)
  • Information pertaining to bank statements, retirement plan statements, debt, safe deposit boxes, other assets, and important financial data.
  • A list of specific bequests of personal property containing identifying information on important personal items and the names of specific individuals who are to receive those items.

It is often small personal items that are of high sentimental value and cause the most contention among family members, so it is important to provide specific instruction relating to specific personal property that isn’t typically detailed in a Last Will in Testament. While a Letter of Instruction isn’t a legally binding document, it can be a powerful tool when used alongside a Last Will and Testament. It should be viewed as a supplemental document used to provide more specific detail than what is contained in the Will.

While it is easy for us to put off this type of planning, the importance of providing loved ones with guidance during a time of grief cannot be overstated. The only certainty in life is death. Death is inevitable, yet most people still do not want to face this reality that is necessary in order to create a Will and Letter of Instruction. The ones we leave behind will be thankful for the added guidance.