What Is a Letter of Instruction and Why Do You Need One?
A letter of instruction is a practical guide you create during your lifetime to help your executor manage your affairs after you die. While your will is a legal document that transfers property, a letter of instruction is a set of detailed, non-binding instructions that tell your executor how to handle practical matters: where your important documents are, how to pay bills, which professionals to contact, funeral preferences, and your wishes for specific assets. It's the difference between leaving your executor with a property list and leaving them a roadmap. Most people die without one, forcing their heirs to spend months figuring out where accounts are, who to call, and what you would have wanted. A good letter of instruction can cut that time and stress in half.
Quick definition: A letter of instruction is a practical guide (not a legal will) that provides your executor with information about your assets, debts, professional contacts, and final wishes.
Key Takeaways
- It's not a will. A letter of instruction is separate from your will and doesn't transfer property. It's a practical guide your executor uses alongside your will.
- It's discoverable and non-binding. Your executor should follow it, but it doesn't have legal force. It's a guideline, not a law.
- It covers practical details wills can't. Where to find your insurance policies, passwords to online accounts, funeral preferences, and thank-you note suggestions belong in a letter of instruction, not a will.
- It's a time and money saver. An executor searching for financial accounts might take months or hire a forensic accountant ($100+/hour). A detailed letter can cut this from months to days.
- It needs to be easy to find. Your executor needs to know it exists and where to find it. Tell them directly during your lifetime.
- Keep it organized and updated. A 50-page rambling letter is less useful than a tightly organized one. Update it every 2–3 years as your circumstances change.
What Should Go in a Letter of Instruction
A comprehensive letter covers practical matters in clear sections:
1. Header and Key Information
Start with basic information your executor needs immediately:
LETTER OF INSTRUCTION
Prepared by: [Your full name]
Date prepared: [Date]
My executor is: [Name, phone, email]
My attorney is: [Name, firm, phone]
My will is located: [Where—safe deposit box, attorney's office, etc.]
Additional copies:
- [Backup location]
- [Attorney's office]
2. Location of Important Documents
Your executor's first task is gathering documents. Tell them where to find:
- Your will and trust documents
- Birth certificate and marriage certificate
- Social Security card or number
- Insurance policies (life, home, auto, disability)
- Property deeds
- Tax returns (last 3 years)
- Bank statements
- Investment statements
- Business agreements
- Passwords or password manager master password
Example:
Important documents are stored as follows:
Will and trust: Safe deposit box at First National Bank, Box #456
Key location: Desk drawer, marked envelope
Bank contact: [phone, address]
Insurance policies: File cabinet, office, second drawer
Life insurance: [Policy number, carrier, agent]
Homeowner's insurance: [Policy number, carrier, agent]
Tax returns (2021–2023): File cabinet, kitchen
Digital assets and passwords: Password manager (1Password)
Master password: [location—sealed envelope with attorney / in safe deposit box]
3. Financial Accounts and Assets
List every bank account, investment account, and asset:
| Account | Institution | Account number | Current value | Notes |
|---|---|---|---|---|
| Checking | First National Bank | 4567890 | [current] | Primary account; bills paid from here |
| Savings | First National Bank | 4567891 | [current] | Emergency savings |
| Brokerage | Fidelity | 987654 | [current] | Stocks and mutual funds |
| IRA | Fidelity | 987655 | [current] | Beneficiary: [name] |
| 401(k) | Employer plan | [number] | [current] | Beneficiary: [name]; contact HR |
| Home | [Address] | Mortgage: [bank/amount] | [approx value] | Property tax: [amount]/[frequency] |
| Vehicle | [Year/make] | Insurance: [carrier] | [approx value] | Title in: [location] |
| Cryptocurrency | Ledger wallet | [details] | [approx] | Seed phrase: [location] |
Add notes about any special instructions, such as: "The brokerage account has specific holdings I want to remain in place—don't liquidate for the estate tax bill. Sell other assets first."
4. Digital Assets Schedule
Include your digital asset inventory (see Chapter 13 for details):
Digital Assets:
Email (Gmail): john@gmail.com
Recovery contact (set during lifetime): jane@example.com
Password: [location]
Associated accounts that rely on this email: Brokerage, PayPal, etc.
Brokerage (Fidelity): Username [name]
Password location: [location]
Two-factor authentication: Phone number [number]
Cryptocurrency (Bitcoin wallet)
Location: Hardware wallet (Ledger) in safe deposit box
Seed phrase: Safe deposit box, envelope labeled "Ledger"
5. Debts and Liabilities
List everything your executor needs to pay:
Outstanding debts:
Mortgage (home): First National Bank
Account number: [number]
Current balance: [amount]
Monthly payment: [amount]
Status: Should be paid from estate before distribution
Credit cards:
Card 1 (Chase): [last 4 digits], Balance [amount]
Card 2 (AmEx): [last 4 digits], Balance [amount]
Auto loan: [Bank], [account], Balance [amount]
Medical debt: [Hospital name], [account], Balance [amount]
Note: Check if life insurance covers this.
Property taxes: [Jurisdiction], Annual payment [amount/date]
6. Insurance and Life Proceeds
Your executor needs to know how to file insurance claims:
Life insurance:
Policy 1 (death benefit):
Carrier: [Company name]
Policy number: [number]
Beneficiary: [name] (primary); [name] (contingent)
Death benefit: [amount]
Agent contact: [name, phone]
How to claim: Contact agent or call [number]
Policy 2 (term life):
[Details]
Notes: The life insurance benefit goes directly to the named beneficiary, NOT into the estate.
It is not subject to estate tax and does not require probate, but the beneficiary may need
notification. I want my executor to inform beneficiaries promptly.
Home insurance:
Carrier: [Company]
Policy number: [number]
Amount: [coverage]
Annual premium: [amount]
Agent: [contact]
Note: Keep this policy in force during estate settlement to protect the house.
7. Professional Contacts
List every professional your executor might need:
Attorney: [Name, firm, phone, email]
Specialty: Estate planning
Notes: [Attorney has copies of my will and trust]
Accountant/CPA: [Name, firm, phone, email]
Specialty: Personal and business tax
Notes: File the final 1040 and estate tax return (if needed)
Financial advisor: [Name, firm, phone, email]
Manages: My investment portfolio
Notes: Can help advise on asset distribution
Insurance agent: [Name, company, phone]
Covers: Life, home, auto policies
Realtor (if applicable): [Name, firm, phone]
Notes: Contact if property needs to be sold
Bank manager: [Name, bank, phone]
Familiar with my accounts
Business partner/advisor (if applicable): [Name, contact]
8. Funeral and Memorial Preferences
Many people skip this but it's invaluable:
My funeral and memorial preferences:
Cremation or burial: [Choice]
Funeral home: [Name and contact, if you have a preference]
Cost estimate: [If you've pre-planned]
Who to contact: [Name, phone]
Memorial service: [Your wishes—large gathering, small private service, none]
Location: [If preferred]
Attendees: [If you have strong feelings]
Obituary: [Key points you'd want included]
Contact information: [Local newspaper contact, if you have one]
Charitable donations in lieu of flowers: [If preferred]
Charities: [Names and contact]
Religious or cultural preferences: [Any specific traditions or readings]
Cost budget: [How much you've set aside or are comfortable with]
9. Distribution Instructions and Final Wishes
Beyond the legal will, express wishes about specific items:
Distribution of personal items:
My watch collection: I want these distributed as follows:
- Rolex to [name] (my son)
- Omega to [name] (my nephew)
- Other watches: Auctioned; proceeds to [charity or estate]
My book collection: I want [friend name] to choose any books they'd like.
Remaining books: Donate to [library/charity]
My vehicle: I want [name] to use it. If they don't want it, sell and use proceeds for [purpose].
My jewelry: [Specific pieces and intended recipients]
My photography and artwork: [Preferences for display, sale, or donation]
My photograph albums and digital photos: Distribute copies to [names]; originals to [location/person]
10. Executor Special Instructions
Give your executor explicit guidance on handling specific scenarios:
Special instructions for my executor:
- If my estate is large enough to trigger estate tax (federal or state), hire a CPA
experienced in estate tax before distributing assets. The cost is tax-deductible,
and they may find ways to minimize the bill.
- If any beneficiary challenges the will or makes unusual demands, contact my attorney
immediately. Do not settle disputes on your own.
- My business (if applicable): [Specific instructions—keep it going, sell it, wind it down]
- My charitable interests: I'm interested in [organizations]. Consider making a charitable
donation if the estate can afford it.
- My pets: [Names and care plans]. [Person name] has agreed to adopt [pet names].
$[amount] is set aside for their care. Contact [name] immediately.
- My debts: Some of my debts (like the mortgage) should be paid from the estate.
Others may be forgiven if there's not enough liquidity. Prioritize: [list order]
- Tax planning: Consider [strategy—Roth conversions, charitable distributions, etc.]
if it would benefit beneficiaries.
- Timeline: I don't expect any rush to distribute assets. Take time to get things right,
even if it takes 12–18 months. Better slow and correct than fast and wrong.
11. Digital Legacy and Social Media
Address what happens to your online presence:
My online presence:
Email (Gmail): john@gmail.com
I want this: Memorialized (converted to memorial status; family can view but not use)
Legacy contact: [Set during lifetime; they can manage the account]
Facebook: [URL/profile]
I want this: Memorialized (same as email)
Instagram: [Account]
I want this: Deleted (permanently removed)
Blog/website: [URL]
I want this: [Maintained / archived / deleted]
Contact information: [Website hosting, domain registrar]
YouTube channel: [URL]
I want this: [Maintained / memorialized / deleted]
LinkedIn: [URL]
I want this: Account closed
Digital photos and archives: [Details on cloud storage, external hard drives, etc.]
I want these: Preserved and shared with [names]
12. Tax Information
Help your executor understand your tax situation:
Tax details my executor should know:
Last tax return filed: [Year], filed [date]
CPA/accountant: [Name, contact]
Copy location: [Where]
Estimated taxes: [Whether you pay estimated taxes; amounts and schedule]
Business income: [If applicable—what kind, where records are]
Investment income: [Dividends, capital gains, interest; records location]
Charitable deductions: [Donations you make; documentation location]
Tax refunds: If a refund is pending, it belongs to [estate / specific beneficiary].
Final 1040: A final federal tax return will need to be filed for [this year].
State return may also be required.
Accountant: [Contact]
How to Create and Store Your Letter
Writing process:
- Start with an outline. Use the sections above as a template.
- Gather information. Hunt down account numbers, policy numbers, contact information.
- Be specific. "My checking account is at a bank" is useless. "My checking account is at First National Bank, 123 Main St, account #4567890" is helpful.
- Write clearly. Assume your executor is not a financial expert. Avoid jargon. Explain things.
- Include contact information. Every institution, professional, and person mentioned should have a phone number and email.
- Review and update. Every 2–3 years, reread your letter and update account numbers, balances, and beneficiaries.
Storage:
- Keep the original with your will in your safe deposit box or with your attorney.
- Give a copy to your executor (with instructions to store it safely).
- Consider giving a copy to your spouse or a trusted family member.
- Store a digital copy in your password manager or encrypted cloud storage (with access instructions for your executor).
Make it discoverable:
- Tell your executor it exists and where to find it.
- Reference it in your will: "My executor should refer to my Letter of Instruction, stored at [location]."
- Consider keeping a backup in your home safe, clearly labeled.
Real-World Examples
Example 1: A letter saves months of searching.
When Margaret died, her executor found her will and trust documents but had no idea about her bank accounts. She didn't have a formal letter of instruction, but she had jotted down notes. The executor spent three months calling banks, showing death certificates, proving authorization, and slowly tracking down accounts. If Margaret had left a detailed letter listing every account, contact, and access method, the process would have taken two weeks. She left behind: a checking account at First National, savings at a credit union, a Fidelity brokerage account, and $75,000 in cryptocurrency in a hardware wallet (which the executor never found). The crypto was lost.
Example 2: A letter prevents family conflict.
Tom left detailed instructions about his personal items: his car to his son, his guitar collection to a musician friend, his watch to his nephew, and his artwork to a museum. His will was simple (50/50 to his two adult children), but the letter spelled out his specific wishes for meaningful items. Without the letter, his children might have fought over the car or sold the artwork. With it, everyone knew what Tom wanted, and the distribution was smooth.
Example 3: A letter provides critical financial guidance.
Sarah's estate included appreciated stock and a significant amount of cryptocurrency. Her letter instructed her executor to "contact my CPA before liquidating investments; there may be capital gains tax planning opportunities." Her executor followed this advice, worked with a tax professional to use charitable distributions and Roth conversions, and saved the estate $150,000 in taxes. Her beneficiaries received significantly more.
Common Mistakes
1. Writing a rambling, stream-of-consciousness letter. A 40-page letter with personal anecdotes is hard to navigate when your executor is in crisis mode. Keep it organized and practical. Use sections, tables, and clear headings.
2. Mixing a letter of instruction with a will. Some people write "I want my executor to do X and Y and distribute property as follows..." in one document. This blurs legal instructions (which belong in a will) with practical guidance (which belongs in a letter). Keep them separate.
3. Not telling anyone the letter exists. If it's in your safe deposit box and no one knows about it, it might not be found for months. Tell your executor explicitly where it is.
4. Including confidential financial information in an unsecured location. If you leave your letter in a drawer, anyone can read it and learn your account numbers. Keep it secure—in a safe deposit box, with your attorney, or in encrypted digital storage.
5. Letting it go stale. You wrote a detailed letter five years ago with your then-current financial information, but you've since moved banks, changed advisors, and bought a new home. The old letter is partly useless. Review and update every 2–3 years.
6. Over-complicating it. Your letter doesn't need to be legal. It doesn't need your attorney's review (though they can help). It's a practical guide. Even a 10-page letter is better than none.
FAQ
Q: Is a letter of instruction legally binding?
A: No. Unlike a will or trust, a letter of instruction is not a legal document. It expresses your wishes but doesn't have binding force. However, your executor should follow it, and a court would likely consider it evidence of your intent if disputes arise.
Q: Can I include personal messages in my letter of instruction?
A: Absolutely. Many people include letters to loved ones, explanations of why they left certain items to certain people, or apologies and forgiveness. The letter is for your executor and family, so it can be personal. Just keep it organized so the practical information is easy to find.
Q: Should my attorney have a copy?
A: Yes. Your attorney should have a copy of your letter (stored with your will and trust). When your executor visits, the attorney can give them the letter and explain its purpose.
Q: What if I change my mind about something in my letter?
A: Update it. Don't write "I'm revoking my previous letter." Just write a new one and destroy the old. Make sure your executor knows which is current.
Q: Is a digital letter of instruction acceptable?
A: Yes. A digital version (stored in your password manager, on an encrypted drive, or with your attorney) is just as valid as a printed one. Make sure your executor knows how to access it (password, location, etc.).
Q: Can I update my letter myself, or do I need my attorney?
A: You can update it yourself. A letter of instruction is not a formal legal document, so you don't need a lawyer's involvement. Just write an updated version, date it, and tell your executor it's the current one.
Q: What if my circumstances change dramatically (inheritance, new spouse, new business)?
A: Update your letter and your will. Changes in family or finances (especially things affecting who your executor should contact or what your estate includes) warrant a full update.
Related Concepts
- Learn how to protect and organize digital assets in Digital Assets in Your Estate.
- Understand the broader legal framework in Estate Tax Basics.
- Prepare for changes in your situation in When to Review Your Estate Plan.
- Avoid common pitfalls in Common Estate Planning Mistakes.
Summary
A letter of instruction is one of the most practical documents you can leave behind. It's not a legal will, but a guide for your executor—telling them where your accounts are, how to contact professionals, what your preferences are, and how to handle practical matters. Most people die without one, leaving their executors to spend months searching for information and making guesses about intentions. A good letter of instruction can cut settlement time and stress in half. It takes a few hours to write, but it pays dividends in clarity, efficiency, and peace of mind for your family. Store it safely, keep it updated every 2–3 years, and make sure your executor knows where to find it.