Letter of Instruction

What Is a Letter of Instruction for Estate Planning?

This is a document that provides specific information and/or details about estate planning matters. This type of estate planning tool is a kind of durable power that allows the individual to decide how his or her assets should be handled in case he or she becomes legally incapacitated. 

Letter of instructions not only helps you manage everyday affairs, but it also enables you to make decisions about your health care, your financial investments, and much more.

This Letter of Instruction makes the difference between someone else making important decisions for you or having the power to make these important decisions yourself.

How Letter of Instruction Used in Estate Planning

Often, a letter of instruction is used to give someone you trust the power to take care of legal matters for you if you become unable to make these decisions by yourself.

Letter of instructions also allow a person to detail how certain assets should be distributed in case he or she becomes incapacitated.

Once a Letter of Instruction has been written and given to someone you trust, it should be kept in a safe place and shown to the appropriate individual if necessary.

When Should Letter of Instruction Be Written?

The Letter of Instructions can be given any time while there is no urgency for executing them instantly. 

These should also be written when an individual becomes legally incapacitated to make his or her own financial decisions because his or her Letter of Instruction can then be activated to take effect.

Inclusion in the Letter of Instruction

Letter of instruction should be written in the present tense even if you are not incapacitated now. This Letter of Instruction should also contain complete, direct, and clear financial instructions that should include what kinds of investments you want your agent to create or maintain. 

You should then give specific details on how you want your estate distributed to people who would inherit it. You should also write information about where your Letter of Instructions should be stored and how it can be accessed.

Writing Letter of Instruction

Before you start writing a Letter of Instructions, make sure you discuss the reason behind the Letter with the person whom you want to write to and let him or her know what will happen if he or she executes these Letters.

It is your responsibility to ensure that Letters of Instructions are executed by the person you have chosen, so do not choose someone who can resist or refuse to follow your directions. 

Letter of instructions should contain specific information about each item in your estate and for this reason Letter of Instruction should be written with clear headings so it will be easy for the person you choose to follow it. 

Expert Suggestions for Writing Letter of Instruction

This should be written as a letter and not as a will. It should contain specific information about each item in your estate. Letter of instruction must only include the name of the individual, who will execute the letter in case of the incapacitation of the Testator.

The letter should be written by the Testator personally. It must define terms regarding powers granted to the agent. It must also be witnessed upon writing. The letter must provide instruction regarding its disposition when death occurs.

This must contain the power of revocation or its copy should not be delivered to or have any contact with anyone other than the person(s) for whom Letter is intended. Letter of Instruction must not be attached to any other document

How Letter of Instruction Benefit People

Letter of instructions is beneficial to the individual who makes them because they help prevent others from making decisions for him or her. 

It is also important to make the letter when you are in good physical shape so that your Letter does not have any loopholes.

Letter of Instructions is also helpful in case there is a legal battle over the estate, Letter of Instruction can help show that you meant for it to be handled by someone else rather than to the government or one of your opposition.

Key Takeaways

The Letter of Instruction is a form of estate planning that allows an individual to make decisions about his or her own affairs if he or she becomes legally incapacitated. Letter of Instructions also allows the person to distribute his or her assets as per requirement. 

Letter of Instructions should always be written when there is no urgency and must be kept in a safe and secure place.

Letter of Instructions is also helpful in case there is a legal battle over the estate as Letter of Instruction can help show that you meant for it to be handled by someone else rather than to the government or one of your opposition. 

To define Letter in further detail, Letter of Instruction refers to a document written in legal terms that allows an individual or multiple people to execute your wishes if you are ever incapacitated. Letter of instructions also help distribute assets.
Letter of instructions needs to provide information about what you want to be done with your assets. It should also specify how a Letter of instructions can be accessed by the person you have picked to carry it out on your behalf if incapacitation occurs.
Letter of Instructions is executed by the person you have chosen to carry out a Letter on your behalf. Letter of Instruction should be read in front of witnesses who will later attest Letter was signed with your consent.
When a death occurs, a Letter of Instruction should be read in front of witnesses who will later attest Letter was signed with your consent. The Letter should provide information about the disposition of the Letter upon death.
Letter of Instruction is not a Will but rather an instruction, Letter of instructions must contain specific information about each item in the Letter of instructions. It must also include the revocation clause. Also, it is usually not recorded in the court system.

Disclaimer: The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.