ESTATE READ TIME: 4 MIN
What Is a Letter of Instruction?
Many Americans approach retirement planning with a strong focus on finances, investment accounts, and long-term income strategies. However, estate planning is an equally critical component of preparing for the future. One of the most practical yet often overlooked tools in estate preparation is the letter of instruction.
A letter of instruction is a written document created by an individual to provide supplementary guidance about their estate, personal preferences, financial accounts, and logistical details. Unlike a will or trust, a letter of instruction is not a legally binding document. Instead, it serves as an organized reference point—often for executors, beneficiaries, or family members—to help them navigate responsibilities during emotionally difficult transitions.
The letter can contain sensitive information, including account numbers, digital asset access details, funeral wishes, and the location of critical legal or financial documents. While it is not enforceable under law, many estate attorneys and financial professionals consider it a highly useful companion to formal estate documents because it can reduce confusion and streamline administrative tasks.
Why Estate Preparation Matters in Retirement
Estate preparation is more than a plan for the distribution of wealth. It is a system designed to ensure clarity, reduce administrative burdens, and communicate personal intentions. In retirement, estates can grow more complex due to accumulated assets, healthcare directives, insurance policies, business interests, intellectual property, and multiple financial accounts.
Without centralized guidance, heirs may encounter delays, increased professional service fees, or uncertainty about personal wishes. The letter of instruction helps address this gap by offering a consolidated, human-written guide to the non-legal but highly actionable details that formal documents do not always include.
It is also a place where individuals can share personal context—without inserting subjective language into legally sensitive instruments like wills or trusts.
What Should a Letter of Instruction Include?
1. Locations of Legal and Financial Documents
- Wills, trusts, insurance policies, deeds, and vehicle titles
- Healthcare directives and power of attorney documents
- Contact details for professionals (CPA, attorney, insurance agent)
- Safe deposit box locations and key access
2. Inventory of Financial Accounts and Assets
A clear list of accounts and assets can significantly reduce administrative friction. This section may include:
- Checking and savings accounts
- Employer retirement plans (401(k), 403(b), 457 plans)
- Individual retirement accounts (Traditional IRA, Roth IRA)
- Pension, profit-sharing, or deferred compensation plans
- Brokerage accounts, stocks, bonds, CDs, or money market accounts
- Life insurance policies
It is common for individuals to include account numbers and institutions. Some may also provide PINs, passwords, or instructions for accessing digital account vaults. Risk note: This information should be stored securely because it may expose estates to fraud or identity risks if mishandled. Consider sealed delivery or encrypted storage when sharing digital access details.
3. Government Records and Benefit Statements
- Most recent tax return location
- Social Security statement and SSA account details
- Medicare or other federal benefit information
- Military benefit or pension records (if applicable)
4. Digital Assets and Online Accounts
Modern estates often include digital property. These may consist of:
- Email accounts
- Social media accounts
- Cloud storage services
- Domains, websites, CMS access (WordPress, hosting dashboards)
- Subscription services
- Digital wallets or payment apps
Including digital asset details can help executors secure, transfer, or archive accounts appropriately. Many estate professionals encourage families to avoid direct password storage unless the letter is kept in a secure personal vault or shared only through encrypted channels.
5. Funeral, Burial, or Memorial Preferences
Although most Americans do not spend significant time thinking about end-of-life arrangements, many have strong personal preferences. A letter of instruction can provide:
- Burial or cremation wishes
- Cemetery plot deed location
- Preferred speakers, music, hymns, or readings
- People or organizations to notify
- Personal messages to heirs
- Memorial style or cultural preferences
These preferences are not legally enforceable, but families generally value clear guidance. This section may also include contact information for friends, community groups, or organizations that should be notified when a death occurs.
How to Structure a Letter of Instruction
There is no required format for a letter of instruction. Some individuals write it casually, while others structure it like an administrative checklist. Regardless of tone, it should:
- Use clear headings
- Include updated institutions and contacts
- Be revised annually or when accounts change
- Be stored securely
- Be referenced in estate discussions with family or executors
Many families revisit these letters only when needed, so clarity is essential. To avoid security risks, do not leave this letter in unsecured digital notes, email drafts, or unprotected cloud folders.
Security and Risk Awareness
Because a letter of instruction may contain private financial and personal data, there are inherent risks. These risks are not a reason to avoid the document, but they are a reason to handle it responsibly. Fraud risk, identity theft, and unauthorized account access are common estate vulnerabilities. Use locked physical storage or encrypted digital vaults when preparing this document.
A Helpful Companion—Not a Replacement
A letter of instruction does not replace a will, trust, or healthcare directive. It complements them. Formal estate documents govern the legal transfer of assets. The letter governs the human details—the ones families and executors need most.
For U.S. adults planning for retirement, the letter of instruction is a practical step that can reduce uncertainty, help families locate accounts, clarify memorial wishes, and organize benefit statements in one consolidated place.
Disclaimer: This content is for educational purposes only and does not constitute financial or legal advice. It reflects general estate planning principles and may not apply to all individual circumstances.
For additional estate and retirement resources, consider reviewing guidance from regulatory and benefits authorities, including the IRS, SEC, FINRA, and the Social Security Administration.
