A Letter of Instruction (LoI) is not a legal requirement, but in a complex world it can make things easier for your heirs and the executor of your estate.
Your will is a legal document and the executors of your estate will be bound by the law and clauses spelled out in your will. There is no need to update your will frequently. However, we are all surrounded by detail that's kept secret to avoid being a victim of identity theft and fraud. This detail, on how you arranged your operative life, could make it much easier for your heir's and your executor to wind up your estate.
My financial affairs, holdings, and operating structures would seem very complex to the uninitiated. Therefore I update from time to time my LoI. It contains all details in one document, which poses an immediate security risk. I therefore always password protect this document, I never transmit it by email or fax, and printed copies – if any - are held in a safe. I never leave the document open on my PC if I am not working on it.
Recently I had to undergo a heart bypass operation. Seeing that I have not updated my LoI for more than two years, I spent considerable time in updating it. It is amazing how much detail changed over the past two years.
I started the letter with the names and contact detail for our auditor, the administrators of our family trust structure, and of our portfolio manager.
I then explain each bank account and why it exists, each loan account, every letter of wishes to the trustees, every property and why it was purchased, etc. Here you have the freedom to explain in detail where the more formal language of a will is more restrictive.
I also explain in detail the measures in place to minimize estate and other duties.
In the next section I give detail on how to access my computers and joint bank accounts online. Where and how backups can be accessed.
I end the LoI with a step by step detailed description on how I would have transferred all our insurance, medical plan, vehicles, licenses, accounts, etc into my wife's name. And how to manage it.
Keeping a Letter of Instruction regularly updated is a bit of a pain in the neck. However, I have observed first hand the utter chaos in a household when the managing partner falls away unexpectedly. You don't want that!
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