Basic Estate Planning: Letter of Instruction

Fact Sheet 5
EP-5
Community Development
Date: 
07/06/2012
James C. Skeeles, Ph.D., Extension Educator Emeritus in Agriculture and Natural Resources and Community Development, skeeles.1@osu.edu
Russell N. Cunningham, Attorney and OSBA Certified Specialist in Estate Planning, Trusts, and Probate Law, Barrett, Easterday, Cunningham & Eselgroth, LLP, rcunningham@ohiocounsel.com

The tool discussed in this fact sheet is a letter of instruction. There is no legal requirement for a letter of instruction, and it is not legally binding. It can contain whatever you wish, and it can be typed or handwritten. An attorney does not need to be involved with its preparation, but you might want to make your attorney aware of its presence and contents.

In most instances, the desire of the family to carry out the wishes of the deceased is so strong that the letter of instruction carries authority despite its lack of legal backing. Spouses might not have completely communicated their wishes to one another, so a letter of instruction might be quite helpful to a surviving spouse. A good letter of instruction can save a lot of time, effort, and expense in administering your estate.

If you do not feel that your spouse and/or family will support your wishes and you want your plan to be legally binding, put your wishes in your will, not in a letter of instruction.

It is imperative that the executor and heirs know of the existence and location of a letter of instruction. The first order of business in a letter of instruction is to outline the details that will help family, friends, and surviving spouses through the trying hours after the death of a loved one. If your loved ones do not know of the existence or the location of your letter of instruction, the letter is useless. When writing your letter of instruction, remember that at the time it is read, your loved ones will need all the help they can get. Otherwise competent people might not be thinking clearly at that time. A suggested list of items to include in a letter of instruction is as follows.

Contact information for each of the following:

  • family and friends to contact directly
  • your funeral director
  • your attorney
  • your stock or bond broker
  • your life insurance agent(s)
  • your property and liability insurance agent(s)
  • your present and/or former employer(s)
  • your business associates
  • your clergy

Location of important papers:

  • will
  • birth certificate
  • marriage certificate
  • income tax returns
  • insurance policies
  • deeds
  • social security card
  • checking account books
  • savings account books
  • certificates of deposit
  • credit cards and statements

Information regarding:

  • location of safety deposit box
  • inventory of deposit box contents
  • stock and bond holdings
  • real estate holdings
  • military service
  • insurance
  • life, including beneficiaries
  • property
  • liability
  • medical
  • accident
  • income disability
  • retirement system(s), including beneficiaries
  • annuities, including beneficiaries
  • debts

Arrangements you have made regarding:

  • durable power(s) of attorney
  • living will
  • location of burial lot
  • donation of anatomical gifts
  • funeral instructions, preferences, pre-payments, and owned burial plots

A letter of instruction containing the above information will most likely be much appreciated by the person(s) handling your affairs. However, letters of instruction might contain additional details concerning disposition of property that are normally not in a will. The details might not be in the will because they might be too sensitive or too numerous to take up an attorney's time. Also, wishes for disposition of personal property might change often enough that one wishes to be able to change these without seeing an attorney. Memorabilia and selected personal property items are good candidates for a letter of instruction. Remember that there is no legal basis to back up a letter of instruction; if an heir is likely to disagree with or dispute an item in the letter of instruction, put it in the will. It is better to list items in a letter of instruction than to put name stickers on items. Stickers can fall off or be switched.

The letter of instruction should supplement the will. It should never contradict the will, as the will takes precedence. Direction of property outside the will and incorporated in the will should predate the will. In a letter of instruction, pay attention to details. Details are of much assistance to the executor and might make the difference between heirs getting along or feuding. Specific details are important even if the executor is very close to you. The closer the executor is to you, the harder it will be for that person to think straight when affairs need to be settled. Written details, even if not included in the will, are much better than verbal communication. It is possible that some heirs might have been told one thing and others might have been told something else. Details too little or too sensitive to be included in the will are often the stumbling blocks that cause friction among heirs. The more details taken care of by the estate owner, the less chance for problems upon the settling of the estate.

Instructions for the disposition of all assets, not just the major ones, are important. Some of the biggest disagreements and sources of lifelong hard feelings occur due to the distribution of items of high sentimental value. The deceased generally is revered upon death, which allows a unique credibility that none of the heirs will have—even the surviving spouse or executor. Parents can do their children a great service by saving them from a bidding war, a public auction, or a draw of the straws for items with sentimental value. However, some families prefer to have children take turns selecting items one piece at a time or to have a private family auction, with cash in the estate used to equalize values for the children who do not "buy" as much. However, if money is needed to settle the estate, these options might not be possible.

Parents and elders have not only a unique credibility, but also might have the responsibility to decide the disposition of sentimental items. This responsibility gives rise to the need for input from heirs before decisions are made. You might think you know the preferences of heirs, but their preferences might have changed over time. The best way to know their thoughts is to ask them!

Executors are often put in a no-win situation when forced to decide which child or heir gets an item that several desire. Further, executors often don't get their fair share because they want to make sure the other heirs don't feel that they have abused their power as executor.

The letter of instruction is under-used. The fact that the letter is not legally binding is seldom a problem as there are few heirs that will go against the wishes of the deceased. The more frequent case is that the deceased has not communicated in writing all wishes, and the heirs disagree as to what the wishes were.

Allow us to relay an instance where one sentence in a letter of instruction or will could have averted disharmony, hurt, mistrust, and conflict. The will of a widow stated that all assets would be divided equally among the children. According to some of the children, the widow's desire was for one of the children to purchase the home farm from the other children. After the mother's will was read but before the farm was appraised, one child indicated that it was the mother's intention that the farm be sold to the other child for $800 per acre. The farm was later appraised at $1,200 per acre. The mother had not communicated the $800 price to all of the children. The farm was sold to the child for $800 per acre without discussing it with all of the children. The excluded children were very hurt. The children were not as close as would have been the case if the intentions were in writing, even if in a letter of instruction. The excluded children did not necessarily disagree with the price or what was done, but they wished they had been informed and included. The "included" children thought the excluded children to be greedy.

The issue has not been discussed since then. The excluded children will not bring up the issue because they fear that any mention would be perceived as greediness. The excluded children have not even pursued asking if, when, how, and to whom the $800 figure was mentioned. The excluded children are of the opinion that such questions would be seen by the others as challenging the wishes of the mother.

All the above hard feelings and misunderstandings did not occur because any of the children were or are greedy. It was the wish of all the children to do the will of the mother. But the desire of the mother was not communicated to part of the family. In this case, a simple sentence in a letter of instruction would have sufficed.

Preferably, a parent will decide the disposition of property after consultation with all the heirs in an equal manner. A parent might not be aware of an heir's preferences without talking to him or her. Also, there will not be surprises in either the letter of instruction or the will if all the heirs are involved. It is our opinion that it is the owner's obligation to consider heirs' comments and reactions. Then, the owner needs to make decisions. If clear and communicated to all in a similar manner, the decisions will be accepted by the heirs in most cases. However, if it is clear that all the heirs are not in agreement with and comfortable with the owner's decisions, the owner might choose to communicate wishes only through the will.

One thing is for sure, heirs will accept the deceased owner's decisions better than the decisions of the executor. Even if owners cannot bring themselves to communicate unpopular decisions to heirs before their death, it is their responsibility to make difficult decisions. It is the owner's responsibility to do what is right, not what is popular. If decisions are not made clear legally, the letter of instruction is next best.

Do not put off making decisions concerning the disposition of property. Many people put off difficult property disposition decisions. Then, in their last days, their declining health robs them of the motivation necessary to take care of important details.

If all the detailed decisions of your property disposition are not now in order, decide now and consider communicating them, at least verbally, to all heirs. Then, put them in a letter of instruction and/or put them in your will . Do that now, while you can, and while you care.

This concludes the discussion on letter of instruction. The next fact sheet will discuss life insurance as a tool in estate planning.

These fact sheets should in no manner be considered as a replacement for consulting with estate planning professionals, nor should the general principles in these fact sheets be applied to specific situations without consulting with an attorney. 


Your Response

Fact Sheet 5

1. Do you have a letter of instruction? Yes _____     No _____

2. If you have a letter of instruction, does the executor(s) named in your will know of its existence and location?

Yes _____    No _____     Don't have one _____

3. Are there items of yours that more than one of your children or heirs would like to have? Yes _____     No _____

4. If there are items of yours that you think more than one of your children or heirs would like to have, have you confirmed that with all of the children or heirs?

Yes _____     No _____     No items that more than one want _____

5. Have you done your best to inform all heirs of the contents of your will and letter of instruction?

Yes _____     No _____     Don't have a will or letter of instruction _____


Answers

Fact Sheet 5

1. Do you have a letter of instruction? Yes _____     No _____

If you don't, write one. If you update your will, have the letter of instruction dated before the date of the will.

2. If you have a letter of instruction, does the executor(s) named in your will know of its existence and location?

Yes _____     No _____     Don't have one _____

A letter of instruction is of little use if no one knows of its existence or location.

3. Are there items of yours that more than one of your children or heirs would like to have? Yes _____     No _____

If the above answer is yes, you are the best person to decide which child or heir receives it. After you decide, we suggest that you let all children or heirs know your decision. If the decision is so difficult that you can't face all the children or heirs with it, the will is the place to state it so that all children or heirs find out at the same time and in the same manner. If the designation is not in the will, at least put it in the letter of instruction.

4. If there are items of yours that you think more than one of your children or heirs would like to have, have you confirmed that with all of the children or heirs?

Yes _____     No _____     No items that more than one want _____

If the above answer is no, talk to all of the children or heirs to see if they, in fact, want the items. Also talk to the children or heirs who you think might not want the items. When you talk to everyone, make sure they understand that the ultimate decision is yours to make and that you are merely trying to find out if more than one child or heir desires the items. These discussions might save future conflict.

Do not feel compelled to talk to all heirs at once, but do treat all heirs as equally as possible. Do not attempt to have these discussions at a social family gathering. This is serious business, so make sure everyone gets an equal opportunity for discussion. Then, make a decision and communicate it to all children or heirs in the same manner. If the decision can't be communicated to children or heirs, put it in the will or in the letter of instruction.

5. Have you done your best to inform all heirs of the contents of your will and letter of instruction?

Yes _____     No _____     Don't have a will or letter of instruction _____

Others don't always feel as we think they do or should. If possible, confirm that others think as you think they do. Then, make your decision and communicate it. It is your decision, and it is your responsibility to communicate it!

Note that the above question asks if you have "done your best." Surprises in the will or letter of instruction are not the best. However, it is better for your heirs to be surprised than it is for them to try to figure out your wishes after you're gone.

Granted, some might not have the willpower, the inclination, or the fortitude to make difficult asset disposition decisions or to discuss these decisions with their loved ones. However, if family harmony is one of your estate planning objectives, communicating and making the difficult decisions is imperative. 

 

Program Area(s): 
Ohioline http://ohioline.osu.edu