A letter of instruction is a commonly overlooked document that everyone needs to have. In this article, you'll learn what a letter of instruction is + how to write one correctly.
By: Taylor Schulte . May 1st, 2024 A A A
In this article, I’m sharing what a letter of instruction is and EXACTLY how to write one.
In fact, ignoring this simple estate planning task could cause major challenges for your heirs if you pass away.
If you want to learn what a letter of instruction is (and how to create one!), you’ll love this article.
Table of Contents
A letter of instruction is a document that lists all relevant financial information that your family members or executor need if something happens to you.
It also lists contact information for important people in your financial life.
Paired with other estate planning documents (e.g., trust, will, power of attorney, etc.), a letter of instruction will help ensure your estate is settled per your intentions.
This document is so essential that everyone (yes, everyone!) should have at least a simple version on file for their heirs to access.
To better help you understand what a letter of instruction is, consider the following story:
Jack and Jill have been married for 30 years.
Jill is the household “Chief Financial Officer (CFO),” and Jack follows her lead with everything money-related.
Their mortgage is linked up to Jill’s checking account.
The credit cards are in her name.
Jill oversees the insurance policies and pays the bills.
Most importantly, Jill is the point person with their financial planner and CPA.
If something happens to Jill (e.g., injury, illness, death) and she can no longer manage the household finances, Jack would need to take over.
Where does he start? What is the process? Who should he contact?
This is where a letter of instruction can help.
The hardest part about writing a letter of instruction is knowing where to begin and what to include.
While you can always rely on your financial planner or attorney to help with this important document, you may want to write the first version yourself.
To help you take action, we developed a simple 5-step process showing you how to write a letter of instruction:
Let’s dive into each step so you can cross this important estate planning task off your list!
The letter of instruction should include the following information:
Although this is not an exhaustive list of everything that could go into a letter of instruction, it should help get you started.
You should add other relevant information that you feel would be most helpful for future readers of this document.
Before writing out all the details, consider creating an outline for your letter of instruction. An outline will help you determine how to organize the information.
For example, you can group information into different categories as follows:
Or, if you have a larger list of heirs, you can group instructions based on who will oversee different tasks like this:
After you’ve finished the outline, you can begin writing your letter of instruction and filling in the details.
As you write (or type!) your letter of instruction, include all important details and information you believe will be valuable to your heirs.
You might also add some personal touches along the way.
Remember, this letter will be read after something has happened to you. The personal touches you add will help your heirs during this difficult time and provide perspective to the key areas of the letter.
Before you put your pen (or keyboard) down, review the letter and then document a repeatable process for making updates. It’s critical to regularly update your letter of instruction as your accounts, circumstances, and relationships inevitably change over the rest of your life.
Contrary to popular belief, you don’t have to list password information in your letter of instruction.
One alternative is to list basic account information on your letter of instruction and then adopt a password manager to store login credentials safely.
Two popular password managers are LastPass and Dashlane. Both applications offer free and paid versions and an important “Emergency Access” feature. According to LastPass:
“Emergency Access offers an easy way to give others the passwords and logins they’d need to manage accounts on your behalf after an unexpected emergency or death.”
Letter of instruction aside, a password manager is highly recommended for everyone — it’s part of Cybersecurity 101.
Congratulations! You’ve done the hard part. You’ve summarized the most important information related to your financial life in an easy-to-read document.
Now what? Where do you put your letter of instructions?
Here are a few options to consider:
Whichever option you pick for securely storing your letter of instruction, ensure that at least one trusted family member has access. You can also consider giving your trusted financial and legal professionals a copy.
Writing a letter of instruction should only take a couple of hours, but it could save you (or your heirs) months of hassle if something unplanned happens.
To help get you complete this critical estate planning task, grab our letter of instruction sample and free resources below:
Remember, the first draft of your letter of instruction doesn’t need to be perfect. Having something on file is better than nothing, and you can regularly make updates each year when reviewing your retirement plan.
The letter of instruction is a simple document that can help prevent major challenges in the future.
By pairing this letter with the rest of your estate plan, you will help to accomplish two main goals:
Whether your letter of instruction is short and brief or long and detailed, everyone (yes, everyone) should take the time to have this as part of your estate plan!
