One of the most overlooked documents when creating an estate strategy—yet the ideal document to convey intimate details about your affairs to heirs—is a letter of instruction.
This document is not legally binding in any way. It is more of a plain English cheat-sheet that can help anyone involved in the management of your estate. By contrast, a valid will is a legal document and must be followed.1
Your letter of instruction can outline who should get what items that hold a sentimental value. You do not need a lawyer’s help to draft a letter of instruction, and you can change it as your circumstances change.
“A good man leaves an inheritance for his children’s children…” Proverbs 13:22
A simple computer search will provide you with several examples. But as a general guideline, consider having three sections to your letter.2
First, take the opportunity to outline your funeral wishes. You can outline who should officiate, what song should be sung, and what type of flowers you would like. If you have a favorite charity that you would like to receive donations in your honor, consider providing the details in your letter.
Second, give your family some insights about your finances. Here is a short list of items to consider:
- A list of all your assets
- Account information, including account numbers and passwords
- Contact information for us or any accounting professional or attorney who may have helped you with your finances
- Location of your tax returns, trust deeds, birth certificate and other important documents
Third, outline what you would like to happen to your personal items. For example, give some guidance on how you want family pictures divided up. Further, let your heirs know how you want your jewelry and other collectibles distributed. Also, be certain to leave instructions about the care of your pets.
An alternative to a letter of instruction is Everplans, an online software tool that allows users to make arrangement for their estate. We introduced the Everplans to our clients several years ago and have seen the power of the estatestrategy tool. If you would like to learn more, we are happy to send you an invite to Everplans.
If you’re not ready to start with Everplans, on our website, www.cfdadvisers.com, we have a Memorial Services document that you can use. It’s designed to help you organize your thoughts about your estate. It asks general questions, such as “Upon my death, notify the following family members of my passing,” and more specific questions, such as “I desire to have the following musical selections played at my service.”
- Investopedia.com, February 20, 2021
- AARP.com, 2022