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Tony Novak, CPA, MBA, MT
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Sample letter of instruction for estate planning
by Tony Novak, CPA, MBA, MT
,last updated on 4/17/2012
The four key documents of estate planning that every person should have are: 1) letter of instruction, 2) will, 3) living will and 4) durable power of attorney that includes a health care directive.
The first document, the Letter of Instruction, is not a legal document but rather a financial planning tool that helps make the process of settling an estate easier. A Letter of Instruction contains the practical details that are necessary for survivors to carry out the administration of an estate settlement.
I’ve noticed that some people have difficulty imagining what should be included in a letter of instruction without seeing a sample. That is the sole purpose of this article. Of course, each individual’s letter will be completely different and there is no implied intent that the provisions of this sample will be useful in another person’s letter of instruction.
This very basic sample letter is prepared to help get started in this important part of financial planning. There is no specific required format for the letter, so adapt it to your own needs. I tend to prefer a short note without emotional reflections. Many of the sample letters of instruction currently available in financial planning publications today are out-of-date in terms of the fact that they do not reflect the extent of reliance on online banking and other financial transactions in an increasingly paperless world. A modern Letter of Instruction should thoroughly cover the technical guidance that will be necessary to access electronic information.
This information was compiled by (name) on (date) and I plan to update it as situations change.
The intended readers are 1) ____,2) ____ and 3) ____. This is intended to be used in the event of my incapacity or death.
The most recent copy of this Letter of Instruction is a file named “______________.doc” located in the “My Documents” folder on my personal computer – will provide the information you need to begin to manage our assets or distribute them upon my death. Do not rely solely on this printed copy of this document that might be out of date.
All important information is stored electronically on my computer and synced with my online Office365 account. The logon password for my notebook computer is (password). The logon password for my Office 365 account is (password).
Backup files are stored in duplicate systems: 1) on the backup hard drive located in the firebox (details below) and online at www.backup.com. The backup passwords for the data files is (password) on both backup systems. Anyone with average familiarity with PCs and MS Windows software should be able to access this data with the PC passwords.
Almost all of my financial accounts are managed online. The Web sites, account information, usernames and passwords password for all accounts are located in the _____ in the “details” section. This also includes contact information for important people including my attorney. Just start ______, click Contacts, scan through the list and see the “details” section.
Printed and executed copies of my will, living will, durable power of attorney and other important documents are located in the home safe (details below). The will creates trusts that transfer most of the valuable assets that we own to our children. ____ would have control of all assets and then at her death assets would be distributed evenly to our children.
____ has durable power of attorney and authority to make health care choices.
My estate assets consist primarily of interests in ________________ and a ____________ life insurance policy located in the home safe. I have bank accounts at ________ and ____________. I have a health savings account at ___________________.
There may also be an open legal claim for ________ that maybe a significant estate asset.
I have small UTMA accounts for _______ and __________ at ___________ and _________________.
Some of my _________________ contracts may include beneficiary clauses that allow unearned income to continue to be paid to _____. Most of these are automated banking transactions; some income will continue to be deposited into my bank account as long as it is open but alternate arrangements must be made by the beneficiary after the account is closed.
My only specific request that is not contained in the will is that in the event I die while still paying child support, that a priority be given to ensure that cash funds are provided in at least the amount of my current child support to my children to ensure that their lifestyle is not adversely affected because of my early death. The reason for not including this request in the will is to give the executor flexibility in handling my estate.
I suggest but do not require that ______ allow __________ to assist with financial matters involving ____________. This would help co-ordinate available parental support with any family support or trust funds for college expenses.
In the event of my death, _____________should immediately contact my Web host company _______________ and instruct them to remove all of my Web sites for business and legal liability reasons.
An arrangement to sell specific business assets may be included in the legal documents in the safe. If so, contact the intended buyer immediately.
The home safe is located in the ____________________. The key is in __________. A spare key is in ________________.
If you are reading this because I am deceased then be sure to request from the _________ county office a sufficient number of certified death certificates. You will need to send a certified death certificates to each account, to change asset registrations for all other assets that we own, and for insurance payments, etc.
Since the original date of publication, emphasis of some other letters of instruction have been amended to incorporate provisions for cloud computing data systems and various self-executing software programs that are triggered by a notification of death of the owner.
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