Use a Letter of Instruction for Estate Planning

Posted on October 7, 2025
by Brady Ramsay

Including a letter of instruction in your estate plan is a simple yet powerful way to communicate your personal wishes to your family and executor outside of formal legal documents. While not legally binding, the letter can serve as a road map to help those managing your estate to carry out your wishes with fewer questions or disputes. Keep reading to learn more about what to include when using a letter of instruction for estate planning.

Writing an Effective Letter of Instruction

What your letter addresses largely depends on your personal circumstances. However, an effective letter of instruction must cover the following:

Documents and assets. State the location of your will and other important estate planning documents, such as powers of attorney, trusts, living wills, and health care directives. Also, provide the location of critical documents such as your birth certificate, marriage license, divorce documents, and military paperwork.

Next, create an inventory — a spreadsheet may be ideal for this purpose — of all your assets, their locations, account numbers, and relevant contacts. These may include, but aren’t necessarily limited to:

Checking and savings accounts,
Retirement plans and IRAs,
Health and accident insurance plans,
Business insurance,
Life and disability income insurance, and
Stocks, bonds, mutual funds, and other investment accounts.

Don’t forget about liabilities. Provide information on mortgages, debts, and other loans your family should know about.

Digital assets. At this point, most or all of your financial accounts may be available through digital means, including bank accounts, securities, and retirement plans. It’s critical for your letter of instruction to inform your loved ones on how to access your digital assets. Accordingly, the letter should compile usernames and passwords for digital financial accounts as well as social media accounts, key websites, and links of significance.

Funeral and burial arrangements. Usually, a letter of instruction will also include particulars about funeral and burial arrangements. If you’ve already made funeral and burial plans, spell out the details in your letter.

This can be helpful for grieving family members. You may want to mention particulars like the person (or people) you’d like to give your eulogy, the setting, and even musical selections. If you prefer cremation to burial, make that abundantly clear.

Provide a list of people you want to be contacted when you pass away and their relevant information. Typically, this will include the names, phone numbers, addresses, and emails of the professionals handling your finances, such as an attorney, CPA, financial planner, life insurance agent, and stockbroker. Finally, write down your wishes for any special charitable donations to be made in your memory.

Express Your Personal Thoughts

Your letter of instruction complements the legal rigor of your estate planning documents with practical and personal guidance. Indeed, one of the most valuable functions of a letter is to offer personal context or emotional guidance. You can use it to explain the reasoning behind decisions in your will, share messages with loved ones, or express values and hopes for the future.

If you still have questions about how to use or compile a letter of instruction for estate planning purposes, we can help. Contact the estate planning professionals at Ramsay & Associates for additional information.

About the author

Brady is the owner of Ramsay & Associates. He specializes in financial statement preparation and personal, fiduciary and corporate tax and accounting.

His professional experience includes seven years' experience for local and national CPA firms before joining Ramsay & Associates in 2006.

He has a Bachelor of Accounting degree from the University of Minnesota Duluth. He is a Certified Public Accountant, a member of the Minnesota Society of CPA's, an Eagle Scout, as well as an active volunteer in the community.

Estate Planning Tips: 4 Reasons Why Avoiding Probate Is a Smart Move

Posted on September 4, 2025
by Brady Ramsay

When planning your estate, one of the smartest strategies you can adopt is to minimize or avoid probate. Probate is a legal procedure in which a court establishes the validity of your will, determines the value of your estate, resolves creditors’ claims, provides for the payment of taxes and other debts, and transfers assets to your heirs.

While it may sound straightforward, probate can come with several drawbacks that make it worthwhile to avoid when possible. Here are four reasons why avoiding probate is a smart move when it comes to estate planning.

Probate Can Be Time-Consuming

Probate proceedings often take months—and sometimes more than a year—to resolve. During this period, your beneficiaries may not have access to much-needed funds or property.

The timeline can be extended even further if disputes arise among heirs or if the estate includes complex assets. Avoiding probate allows your loved ones to receive their inheritances much more quickly.

Probate Can Be Expensive

Court costs, executor’s and attorneys’ fees, appraisals, and other administrative expenses can consume a portion of your estate, sometimes 5 percent or more of its total value. By using probate-avoidance tools—a living trust, for example—more of your assets can go directly to your heirs instead of being eaten up by fees.

Indeed, for larger, more complicated estates, a living trust (also commonly called a “revocable” trust) generally is the most effective tool for avoiding probate. A living trust involves some setup costs, but it allows you to manage the disposition of all your wealth in one document while retaining control and reserving the right to modify your plan.

To avoid probate, it’s critical to transfer title to all your assets, now and in the future, to the trust. Assets outside the trust at your death will be subject to probate—unless you’ve otherwise titled them in such a way as to avoid it (or, in the case of life insurance, annuities and retirement plans, you’ve properly designated beneficiaries).

Probate Is a Public Process

Bear in mind that anything filed in probate court becomes part of the public record. This means that anyone can discover the details of your estate, including the nature and value of your assets and who has inherited them. Avoiding probate can protect your family’s privacy and shield sensitive information from public view.

Probate May Result in Family Disputes

Probate can sometimes create or exacerbate conflict among heirs. Disputes over asset distribution or the validity of a will can lead to lengthy and expensive litigation. Clear estate planning can prevent misunderstandings and ensure your wishes are carried out smoothly.

Not Your Estate Plan’s Sole Focus

Dealing with the death of a loved one is hard enough without the added burden of navigating the legal complexities of probate. When you structure your estate to bypass the probate process, you ease the administrative burden on your family and give them peace of mind during a difficult time.

However, avoiding probate is just one part of a complete estate plan. The estate planning professionals at Ramsay & Associates can help you develop a strategy that minimizes probate while reducing taxes and achieving your other goals. Contact us today to learn more or to get started.

About the author

Why Choosing the Right Trustee Matters

Posted on July 8, 2025
by Brady Ramsay

It’s not uncommon for an estate plan to contain multiple trusts. They can enable you to hold assets for and transfer them to beneficiaries, avoid probate, and possibly reduce estate tax exposure. When drafting a trust, you must appoint a trustee. While this can be an individual or a financial institution, choosing the right trustee matters. Here are some things to keep in mind as you weigh your options.

Before You Decide on a Trustee

Before choosing a trustee, know that the job comes with many responsibilities — from keeping careful records and making smart investment choices to staying fair and keeping beneficiaries informed. A trustee must always put the beneficiaries’ interests first and handle everything with care, honesty, and good judgment.

What Are a Trustee’s Responsibilities?

Trustees have significant legal responsibilities, primarily related to administering the trust on behalf of beneficiaries according to the terms of the trust document. However, the role can require many different types of tasks. For example, even if a tax professional is engaged to prepare tax returns, the trustee is responsible for ensuring that they’re completed correctly and filed on time.

One of the more challenging trustee duties is to accurately account for investments and distributions. When funds are distributed to cover a beneficiary’s education expenses, for example, the trustee should record both the distribution and the expenses covered. Beneficiaries are allowed to request an accounting of the transactions at any time.

The trustee needs to invest assets within the trust reasonably, prudently, and for the long-term sake of beneficiaries. And trustees must avoid conflicts of interest — that is, they can’t act for personal gain when managing the trust. For instance, trustees typically can’t purchase assets from the trust. The trustee probably would prefer a lower purchase price, which would run counter to the best interests of the trust’s beneficiaries.

Finally, trustees must be impartial. They may need to decide between competing interests while still acting within the terms of the trust document. An example of competing interests might be when a trust is designed to provide current income to a first beneficiary during his or her lifetime, after which the assets pass to a second beneficiary. Although the first beneficiary would probably prefer that the trust’s assets be invested in income-producing securities, the second would likely prefer growth investments.

Qualities of an Effective Trustee

Several qualities help make someone an effective trustee, including:

A solid understanding of tax and trust law,
Investment management experience,
Bookkeeping skills,
Integrity and honesty, and
The ability to work with all beneficiaries objectively and impartially.

And because some trusts continue for generations, trustees may need to be available for an extended period. For this reason, many people name a financial institution or professional advisor, rather than a friend or family member, as trustee.

We Can Answer Your Estate Planning Questions

Choosing the right trustee is an important decision, as this person or institution will be responsible for carrying out the terms outlined in the trust documents. If you have questions about the process or need further guidance, the estate planning professionals at Ramsay & Associates are here to assist. Contact us today, and we can help you weigh the options available to you.

About the author

If You’re Single with No Kids, Estate Planning is Still Important

Posted on May 6, 2025
by Brady Ramsay

Estate planning isn’t solely about passing assets on to direct descendants; it’s about taking control of your future. Even if you’re single and have no children, having an estate plan helps ensure your final wishes are clearly documented and respected.

Without a formal estate plan, state laws will determine how your assets are distributed, and those default decisions might not align with your values or desires. Whether they’re your financial investments or personal assets, a comprehensive estate plan allows you to specify exactly who should receive what, be they close friends, extended family, or even charitable organizations. So, if you’re single with no kids, estate planning is still important. Keep reading to find out why.

Without a Will, Who Will Receive Your Assets?

For single people, it’s critical to execute a will that specifies how and to whom their assets should be distributed when they die. Although certain types of assets can pass to your intended recipient(s) through beneficiary designations, absent a will, many types of assets will pass through the laws of intestate succession.

Those laws vary from state to state but generally provide for assets to go to the deceased person’s spouse or children. For example, the law might provide that if someone dies intestate, half of the estate goes to his or her spouse and half goes to the children. However, if you’re single with no children, these laws set out rules for distributing your assets to your closest relatives, such as your parents or siblings. Or, if you have no living relatives, your assets may go to the state.

By preparing a will, you can ensure your assets are distributed according to your wishes, whether that’s to family, friends, or charitable organizations.

Who Will Handle Your Finances If You Become Incapacitated?

Consider signing a durable power of attorney that appoints someone you trust to manage your investments, pay bills, file tax returns, and otherwise make financial decisions should you become incapacitated. Although the law varies from state to state, typically, without a power of attorney, a court will appoint someone to make those decisions on your behalf. Not only will you have no say in who the court appoints, but the process can be costly and time consuming.

Who Will Make Medical Decisions on Your Behalf?

You should prepare a living will, a health care directive (also known as a medical power of attorney), or both. This will ensure your wishes regarding medical care—particularly resuscitation and other lifesaving measures—will be carried out in the event that you’re incapacitated. These documents can also appoint someone you trust to make medical decisions that aren’t expressly addressed.

Without such instructions, the laws in some states allow a spouse, children, or other “surrogates” to make those decisions. In the absence of a suitable surrogate, or in states without such a law, medical decisions are generally left to the judgment of health care professionals or court-appointed guardians.

Strategies to Reduce Gift and Estate Taxes

When it comes to taxes, married couples have some big advantages. For example, they can use both of their federal gift and estate tax exemptions (currently, $13.99 million per person) to transfer assets to their loved ones tax-free. Also, the marital deduction allows spouses to transfer an unlimited amount of property to each other—either during life or at death—without triggering immediate gift or estate tax liabilities.

For single people with substantial estates, it’s important to consider employing trusts and other estate planning techniques to avoid, or at least defer, gift and estate taxes.

Creating an Estate Plan

Finally, planning ahead can help avoid potential complications in the future. Unexpected events can lead to family disputes if there’s no clear guidance on how your affairs should be handled.

That’s why estate planning is important. With a plan in place, your personal wishes are followed precisely, ensuring that your legacy—whether it includes contributions to a cause you believe in or support for a family member—is preserved exactly as you intend.

Need help creating an estate plan? The tax professionals at Ramsay & Associates can help. Contact us if you’re single, have no children, and have no estate plan. We can help draft one that’s best suited for you.

About the author

A Dynasty Trust Provides for Future Generations

Posted on October 3, 2024
by Brady Ramsay

A-Dynasty-Trust-Provides-for-Future-Generations

When creating estate plans, people generally take their children and grandchildren into consideration and will organize accordingly. For those who would like to prepare beyond that, a dynasty trust provides for future generations and may be a viable option. Let’s look at some of the specifics of this long-term trust.

A dynasty trust can preserve substantial amounts of wealth—and potentially shelter it from federal gift, estate, and generation-skipping transfer (GST) taxes—for generations to come. Plus, it can provide various other benefits and protections for families over an extended time period (perhaps forever).

Establishing and Funding a Dynasty Trust

A dynasty trust can be established during your lifetime, as an inter-vivos trust, or part of your will as a testamentary trust. With an inter-vivos transfer, you’ll avoid estate tax on any appreciation in value from the time of the transfer until your death. Generally, though, with an inter-vivos transfer, the assets won’t be eligible for step-up in basis at your death.

Because the emphasis is on protecting appreciated property, consider funding the trust with securities, real estate, life insurance policies, and business interests. Ensure you retain enough assets in your personal accounts to continue to enjoy your lifestyle.

Factoring in Taxes

Previously, dynasty trusts were primarily used to minimize transfer tax between generations. Without one, if a family patriarch or matriarch leaves assets to adult children, the bequests are subject to federal estate tax at the time of the initial transfer to the second generation. They are then taxed again when the assets pass from the children to the grandchildren, and so on. Although the federal gift and estate tax exemption can shield the bulk of assets from tax for most families, the top federal estate tax rate on the excess is 40 percent—a hefty amount.

Furthermore, the GST tax applies to certain transfers made to grandchildren, thereby discouraging transfers that skip a generation. The GST tax exemption and 40 percent GST tax rate are the same as they are for regular gift and estate tax.

With a dynasty trust, assets are taxed just once, when they’re initially transferred to the trust. There’s no estate or GST tax due on any subsequent appreciation in value. This can save some families millions of tax dollars over the durations of their trusts.

When the assets are subsequently sold, any gain will be taxable. Note that the basis of the assets will be determined at the time of the initial transfer, although depending on the circumstances, the “step-up in basis” rules may help reduce the taxable amount.

Recognizing Nontax Benefits

Regardless of the tax implications, there are many nontax reasons to set up a dynasty trust.

For example, you can designate the trust’s beneficiaries spanning multiple generations. Typically, you might provide for the assets to follow a line of descendants, such as your children, grandchildren, great-grandchildren, etc.

You can also impose certain restrictions. For example, you may limit access to funds until a beneficiary graduates from college.

We Can Help You Plan for Your Family’s Future

A dynasty trust provides for future generations by creating a legacy that will live on long after you’re gone. Be aware, however, that a dynasty trust is irrevocable. In other words, you can’t undo the arrangement if you have a sudden change of heart. If you’re going to chart the course for future generations, you must have the courage of your convictions. The professional team at Ramsay & Associates is here to answer questions about estate planning and other tax concerns. Contact us for guidance.

651.429.9111

Category Archives: Estate Planning