Using a Letter of Instruction to Supplement Your Estate Plan
Creating a comprehensive estate plan is typically a complex process. When done correctly, it is also a process that never really ends. Instead, your estate plan should evolve over time and grow along with your family and your estate. As your plan evolves, you will likely find the need to include additional estate planning tools and strategies that help you accomplish additional goals and fulfill the needs of your growing family. Despite the abundant tools available to help you with your estate plan, you may find that you have pertinent, even crucial, information that applies to your estate plan, yet does not fit anywhere in your existing plan. The Indianapolis estate planning attorneys at Frank & Kraft explain how to use a Letter of Instruction to supplement your estate plan.
Why Your Existing Estate Planning Tools May Not Be Enough
Although every estate plan is unique, the average estate plan will include a number of common documents. For example, a Last Will and Testament typically serves as the foundation of an estate plan, allowing you to appoint an Executor for your estate, gift assets, and nominate a Guardian for minor children. It cannot, however, explain why you did not gift your estate equally to your children nor why you appointed a sibling, instead of a spouse, as the Executor. You might also include a trust, which can help achieve a variety of goals, and into which you will transfer assets. A trust agreement, however, is not the best place to leave detailed instructions about the upkeep of those assets or why you decided to pass down those assets in staggered disbursements. An advance directive can specifically grant an Agent the ability to make healthcare decisions for you if you cannot make them yourself and lets you make certain healthcare decisions yourself ahead of time. It cannot explain the reason why you made those decisions though. All of these estate planning documents are essential pieces to the puzzle you put together in an effort to protect yourself, your assets, and your loved ones. You may still feel though that pieces to the puzzle are missing. A Letter of Instruction can provide the missing pieces.
What Is a Letter of Instruction?
As the name implies, a Letter of Instruction is a document that you may include in your estate plan that provides instructions not found elsewhere in your plan. A Letter of Instruction, however, can also be used for other similar purposes. Anything you choose to include in your Letter of Instructions is not legally binding on anyone; however, the information you include can be crucial to your overall plan. Some common uses for a Letter of Instruction include:
- Provide the location of important estate planning documents, such as your Will, life insurance policies, or a trust agreement.
- Provide a summary of all assets you own along with account numbers and/or online log-in instructions to access the accounts.
- Names and contact information for people that need to be contacted after your death.
- Instructions for maintaining assets. This could be as simple as how to winterize your vacation cottage or how to value your rare coin collection.
- Explanations for controversial decisions you made within your estate plan. For example, if you gave a large donation to a charity or disinherited a child, this is your opportunity to explain why you did what you did.
- Express your wishes with regard to your funeral and burial. Ideally, you included a funeral component in your estate plan; however, you may wish to add details to ensure that your wishes are honored.
Do You Need a Letter of Instruction?
Whether or not a Letter of Instruction is right for your estate plan is ultimately a decision you must make after consulting with your estate planning attorney. Although the instructions you include in a Letter of Instruction are not legally binding, they can go a long way toward assisting with the probate of your estate and can help prevent litigation. Anything you can do to make your Executor’s job easier will ultimately benefit your loved ones. Moreover, if any of the terms of your estate plan are likely to cause conflict or animosity, explaining why you included those terms can deter litigation, or assist your Executor to defend your wishes if litigation cannot be avoided.
Contact an Indianapolis Estate Planning Attorney
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns about estate planning, contact an experienced Indianapolis estate planning attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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