Letter of Instruction in Estate Planning: What It Is & Why You Need It

A Letter of Instruction in estate planning is a document that provides guidance to family members, heirs, and executors about a person’s assets, wishes, and instructions for handling their estate. It supplements a will by detailing practical information such as financial accounts, passwords, and personal messages. While not legally binding, it ensures clarity and ease in estate administration. This guide explains its importance, essential components, and how to write one effectively.

What is a Letter of Instruction?

A Letter of Instruction is a non-legally binding document that provides guidance on handling an estate after a person’s death. It includes personal, financial, and administrative details to assist executors, heirs, and beneficiaries in managing the estate efficiently.

A Letter of Instruction supplements a will by detailing information that is not legally required but is essential for smooth estate settlement. It contains instructions on financial accounts, digital assets, debts, funeral wishes, and key contacts. While it does not replace a will or trust, it helps reduce confusion and delays by offering practical guidance to those responsible for carrying out the deceased’s wishes.

Why is a Letter of Instruction Important?

A Letter of Instruction is important because it provides clear, practical guidance to executors, heirs, and family members on managing an estate. It simplifies the estate settlement process by organizing key details that are not always included in legal documents.

A Letter of Instruction reduces confusion by listing essential financial, digital, and personal information, ensuring executors can locate assets, access accounts, and fulfill final wishes efficiently. It prevents delays and disputes by clarifying instructions for funeral arrangements, debt payments, and ongoing responsibilities. According to the American Bar Association, a well-prepared Letter of Instruction helps heirs avoid unnecessary legal complications and financial hardship during an already stressful time.

A Letter of Instruction enhances estate planning by covering details not found in a will or trust, such as passwords, insurance policies, and contact information for financial advisors. It serves as an informal roadmap for executors and loved ones, ensuring that personal and financial affairs are handled smoothly after death.

What Should Be Included in a Letter of Instruction?

A Letter of Instruction should include essential details that help executors, heirs, and family members manage an estate efficiently. The contents should be clear, organized, and up to date. The following are the key elements to include:

1. Personal Information – Full name, Social Security number, date of birth, and legal documents such as birth and marriage certificates.
2. Financial Accounts – Bank account details, investment portfolios, retirement accounts, and any other financial holdings, including account numbers and institutions.
3. Insurance Policies – Life insurance, health insurance, home, auto, and any other relevant policies, along with policy numbers and contact details.
4. Digital Assets – Online accounts, email logins, social media credentials, cryptocurrency holdings, and instructions on handling or closing accounts.
5. Legal Documents – Location of the will, trust documents, power of attorney, healthcare directives, and any business-related legal paperwork.
6. Funeral and Burial Instructions – Preferences for burial or cremation, funeral arrangements, service details, and any prepaid funeral plans.
7. Debts and Liabilities – Credit card debts, mortgage information, outstanding loans, and instructions on handling payments or settlements.
8. Contact Information – Names and contact details of key individuals, including attorneys, financial advisors, estate executors, and family members.
9. Property and Valuables – List of real estate holdings, vehicles, collectibles, and significant personal belongings with instructions for distribution or sale.
10. Special Instructions – Directions for the care of dependents or pets, charitable donations, personal messages, and any other non-legal requests.

A Letter of Instruction should be stored in a secure location, such as with the will, and shared with the executor or a trusted family member. It should be reviewed and updated regularly to ensure accuracy.

What Not to Include in a Letter of Instruction

A Letter of Instruction should not contain legally binding directives or sensitive information that could lead to security risks. The following should be excluded:

1. Legally Binding Instructions – A Letter of Instruction does not replace a will or trust. It should not include asset distribution instructions or appoint guardians for minors, as these must be outlined in a legal document.
2. Contradictory Statements – Conflicting details that differ from the will, trust, or power of attorney can create confusion and legal complications. The Letter of Instruction should align with formal estate planning documents.
3. Outdated Information – Incorrect financial details, old account numbers, or former beneficiaries can mislead executors and delay estate administration. The letter should be updated regularly.
4. Sensitive Financial Security Data – Social Security numbers, full credit card numbers, and bank PINs should not be included to prevent identity theft or fraud. Instead, provide the institution’s name and account type.
5. Unclear or Vague Requests – General instructions such as “divide assets fairly” or “handle funeral as seen fit” leave too much room for interpretation and potential disputes. The letter should provide clear and actionable guidance.
6. Personal Grievances or Conflicts – Emotional statements, negative comments about family members, or personal disputes should be avoided to prevent tension among heirs.
7. Illegal or Unenforceable Requests – Any instruction that violates the law, such as avoiding taxes or bypassing legal probate processes, should not be included.

A Letter of Instruction serves as a helpful guide for executors and beneficiaries, but it should not replace or contradict legal estate planning documents. It should be stored securely and shared only with trusted individuals.

Is a Letter of Instruction a Legal Document?

No, a Letter of Instruction is not a legal document. It does not have legal authority and cannot override a will, trust, or other estate planning documents.

A Letter of Instruction serves as a supplemental guide for executors, heirs, and beneficiaries by providing practical details that ease estate administration. It contains important information such as account details, digital asset access, and funeral preferences, but it does not carry legal weight in court.

A Letter of Instruction should complement legally binding documents, ensuring clarity in estate management. While it is useful for organizing personal and financial affairs, it should not be relied upon as a substitute for a will or trust.

How to Write a Letter of Instruction

Writing a Letter of Instruction requires clear, structured, and up-to-date information to assist executors and beneficiaries in managing an estate efficiently. Follow these steps to create a comprehensive document:

1. Start with Identification – Include your full name, date of birth, and contact details to confirm authorship.
2. State the Purpose – Explain that the document is intended to provide practical guidance for estate management, but it is not legally binding.
3. List Financial Accounts – Provide details of bank accounts, investment portfolios, retirement funds, and insurance policies, including institution names and contact information.
4. Include Digital Assets – Specify online accounts, email addresses, and digital wallets, along with instructions on accessing or closing them. Avoid listing passwords for security reasons.
5. Provide Legal Document Locations – Indicate where important documents such as the will, trust, power of attorney, and insurance policies are stored.
6. Outline Funeral and Burial Wishes – Detail funeral arrangements, burial or cremation preferences, and prepaid plans if applicable.
7. Specify Debts and Liabilities – List outstanding debts, including mortgages, loans, and credit card balances, with payment instructions.
8. Add Contact Information – Provide names and contact details of attorneys, financial advisors, accountants, and other key individuals handling the estate.
9. Include Special Instructions – Mention personal messages, directions for pet care, or any other specific requests not covered in legal documents.
10. Review and Update Regularly – Ensure accuracy by updating the letter periodically, especially after major life changes.
11. Store It Securely – Keep the letter in a safe place, such as with the will, and inform the executor or a trusted family member of its location.

A Letter of Instruction provides practical guidance that simplifies estate administration. It should be well-organized, clear, and aligned with legally binding documents.

Common Mistakes to Avoid in a Letter of Instruction

A Letter of Instruction is a valuable estate planning tool, but certain mistakes can make it ineffective or create confusion for executors and beneficiaries. Avoiding these errors ensures that the document serves its intended purpose and provides clear guidance.

1. Including Legally Binding Instructions – A Letter of Instruction is not a legally enforceable document. Asset distribution, guardianship decisions, or legally binding directives should be in a will or trust.
2. Failing to Update the Letter – Outdated information, such as old account details, former beneficiaries, or incorrect financial records, can cause confusion. The letter should be reviewed and updated regularly.
3. Providing Incomplete Financial Information – Missing details about bank accounts, debts, or investments can delay estate administration. The letter should include all necessary financial records and points of contact.
4. Storing It in an Inaccessible Location – A Letter of Instruction should be stored in a secure but accessible place. Keeping it in a safe deposit box that the executor cannot access can render it useless.
5. Contradicting the Will or Trust – Conflicting instructions can create legal disputes among heirs. The Letter of Instruction should align with estate planning documents to avoid confusion.
6. Including Passwords and PINs – Sensitive login credentials should not be written in the letter to prevent identity theft. Instead, use a password manager or provide guidance on accessing digital assets securely.
7. Leaving Out Funeral and Burial Wishes – If funeral preferences are not documented, family members may have difficulty making arrangements. The letter should clearly outline burial or cremation instructions.
8. Using Vague or Unclear Language – Instructions should be direct and specific. Ambiguous wording can lead to misunderstandings or delays in carrying out final wishes.
9. Not Informing Key Individuals – Executors, trustees, or family members should be aware of the letter’s existence and location. Keeping it hidden or undisclosed can result in it being overlooked.
10. Failing to Address Debts and Liabilities – Outstanding debts, mortgages, or unpaid bills should be listed along with payment instructions to prevent financial complications for the estate.

Avoiding these mistakes ensures that a Letter of Instruction remains an effective and useful tool in estate planning.

How Can a Letter of Instruction Help Avoid Family Disputes?

A Letter of Instruction helps prevent family disputes by providing clear guidance on estate-related matters that may cause confusion or disagreements among heirs. It eliminates uncertainty and ensures that personal wishes are well-documented.

1. Clarifies Asset Locations and Access – Family members do not have to search for bank accounts, property deeds, or other assets, reducing conflicts over missing information.
2. Explains Funeral and Burial Preferences – Disagreements over funeral arrangements are minimized when clear instructions are provided.
3. Addresses Sentimental Items – Heirs often argue over personal belongings. A Letter of Instruction can specify how these should be distributed.
4. Provides Executor Guidance – A well-detailed letter helps the executor carry out responsibilities efficiently, reducing the risk of disputes over estate management.
5. Sets Expectations for Debts and Liabilities – Clear instructions on debt payments prevent disagreements over financial obligations.
6. Reduces Misinterpretation of Wishes – When instructions are explicitly stated, there is less room for misunderstandings or differing interpretations among family members.
7. Helps Prevent Legal Challenges – A Letter of Instruction that aligns with legal estate planning documents discourages potential disputes and lawsuits.

By addressing potential points of contention, a Letter of Instruction helps maintain family harmony and ensures the smooth execution of an estate plan.

Can You Write a Letter of Instruction Without a Lawyer?

Yes, you can write a Letter of Instruction without a lawyer. A Letter of Instruction is not a legally binding document, so there are no formal legal requirements to follow.

1. Use Clear and Direct Language – The letter should be easy to understand, avoiding vague or complex terms.
2. List Key Information – Include financial details, digital assets, funeral preferences, and important contacts.
3. Ensure It Complements Legal Documents – The letter should not contradict a will, trust, or power of attorney.
4. Store It in a Safe but Accessible Place – Inform the executor or a trusted family member about its location.
5. Update It Regularly – Major life events, financial changes, or new wishes should be reflected in the document.

Although a lawyer is not required, consulting one can help ensure that the Letter of Instruction aligns with formal estate planning documents and does not cause conflicts.