Estate Planning: Letters of Instruction

You may have spent significant time and money getting your estate plan in order and set up the way you want, but what happens next?

A letter of instruction is an important estate planning tool that essentially accomplishes two things: 1) it gives you the opportunity to explain your wishes to your executor and/or beneficiaries to let them know how you want your affairs handled post death; and 2) it tells your executor and/or beneficiaries where to find all of your important documents, accounts, etc.

Important:  a letter of instruction is not a substitute for a will or a trust! It is simply a way for you to clearly let your loved ones know what is important to you and where to find everything they need.  Copies of your letter should be attached to your will, given to your executor and a copy should be kept in a file, drawer or safe in your home (or other place you normally keep important papers in your home).

The topics that are usually included in a letter of instruction are:

• First Steps: this is a handy overview for your family that can include things such as contacting your family members, contact your employer about your death, make funeral arrangements, get death certificate copies, contact the Social Security Administration, process life insurance claims, notify your bank, credit card companies, and other financial institutions.
• Asset List: this should list things like your various insurance policies, pensions, bank accounts and where to find the policies/documents and the names of the custodians/insurance companies.
• Location of Important Papers: indicate where you keep documents such as your will, trust, birth certificate, military records, deeds, insurance policies, pension statements, tax records, investment account statements, checking and savings account information.
• Tax Returns: this should include the name and contact information for your CPA.
• Life Insurance Policies:  a copy of your death certificate must be submitted to all applicable insurance carriers so the more detail you can provide the better.
• Other Insurance: this includes things like accident policies, medical policies, car insurance, homeowners insurance and mortgage insurance.
• Cars, Boats, RVs, Etc.: be sure to indicate where you keep the titles, insurance information, purchase price and brief description of each item.
• Funeral Arrangements: indicate the name and location of the funeral home or type of funeral preferred as well as any cemetery/plot information.
• Family Contact Information: list the names and contact information for family members that you would like to be contacted.
• Physician Information: list the names and contact information for your doctors and other health care providers.
• Financial Matters: indicate the location of any safe deposit boxes, bank accounts, brokerage accounts, documentation for other investments, real property documentation, loan documentation, credit cards, etc. so the respective institutions may be notified and provided with a copy of your death certificate, when applicable.

Just like any other planning strategies, you should review your letter of instruction at least once per year to ensure everything is still accurate.