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A ‘letter of instruction’ can spare your heirs a lot of stress

Although it’s important to have an updated estate plan, there’s a lot of information your heirs need to know that doesn’t necessarily fit into a will, trust, or other document. For instance: Where can your heirs find your insurance policies? How can they locate your bank accounts, and access your safe deposit box? How can they be sure they’ve accounted for all your assets?

The solution is a “letter of instruction,” which can provide your heirs with guidance if you die or become incapacitated.

A letter of instruction isn’t legally binding, but it can give your heirs crucial information to help them tie up your affairs. Without such a letter, it can be easy to miss important items, or become overwhelmed trying to sort through all the documents you’ve left behind.

The letter can be informal, and it doesn’t have to follow any specific format. It’s far better to write something than nothing, so don’t worry that it has to be perfect.

Here are some good things to cover to get you started:

  • A list of people to contact if you die, and of beneficiaries of your estate plan
  • Where to find important documents, such as your will, insurance policies, financial statements, deeds, and birth certificate
  • A list of assets, such as bank and investment accounts, insurance policies, real estate holdings, and military benefits
  • Passwords for online accounts
  • The location of any safe deposit boxes
  • Contact information for lawyers, financial planners, brokers, tax preparers, and insurance agents
  • A list of credit card accounts and other debts
  • Organizations that should be notified in the event of your death (such as professional organizations or boards)
  • Instructions for a funeral or memorial service
  • How you want sentimental personal items to be distributed
  • A personal message to family members

Once you write the letter, be sure to store it in an easily accessible place and to tell your family about it. A letter is of no value if your heirs don’t know about it, or can’t find it!

Also, it’s a good idea to check the letter at least once a year to make sure it’s up-to-date. One way to do this is to update the letter each year at the same time you file your tax returns.

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