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Using a letter of instruction in estate settlements

On Behalf of | Jul 10, 2024 | Estate Planning

As the country’s population ages, many families are newly grappling with the legal complexities of estate planning. Clear communication regarding inheritance and asset distribution is, therefore, paramount.

A letter of instruction is an important yet often overlooked component in this process. A well-crafted letter of instruction can provide clarity and guidance to beneficiaries. While not legally binding, this document can serve as a roadmap for an executor and the deceased’s loved ones, potentially minimizing the risk of misunderstandings and conflicts during the estate settlement process.

Define the scope and purpose

When writing a letter of instruction, begin by clearly stating its purpose. Explain that this document is meant to supplement your will and other legal estate planning documents. You can also emphasize that while it’s not legally binding, it contains important information and personal wishes that you hope will be honored. This preamble sets the tone for the document and helps recipients understand its significance in the context of your overall estate plan.

Detail asset information and location

A crucial component of your letter should be a comprehensive inventory of your assets. This includes financial accounts, real estate holdings, valuable personal property and digital assets. Provide detailed information on where to find important documents such as deeds, insurance policies and tax returns. Again, don’t forget to include account numbers, passwords and contact information for financial advisors, legal teams and other relevant professionals. This level of detail can significantly streamline the estate settlement process and help ensure that no assets are overlooked.

Explain your distribution decisions

You can use this opportunity to provide context for your asset distribution decisions. Explain your reasoning if you’ve made choices that might seem unequal or unexpected. For instance, you might clarify why you’ve left a family heirloom to one child over another or why you’ve allocated funds differently among beneficiaries. This transparency can be invaluable in maintaining family harmony and preventing potential disputes.

A thoughtfully composed letter of instruction is more than just a document—it’s a final act of care and consideration for your loved ones. By providing clear guidance, explaining your decisions and sharing personal insights, you can help ensure that your estate is properly settled according to your wishes while preserving family relationships.

When used in conjunction with formal legal estate planning tools, the document can be a powerful means of safeguarding your legacy and easing the burden on your beneficiaries during a challenging time.