An irrevocable letter of direction, also known as, a letter of direction gives the recipient-specific rights regarding the sender or writer’s personal finances.
Nearly any individual can write a letter of direction, albeit the correct procedures have been adhered to. An individual can write a letter of direction to their bank, instructing them to close a personal account on their behalf. This gives the bank authority to close the chosen account and transfer the leftover funds to the appointed bank account.
A letter of direction can also be used between two or more business partners. If one business partner decides to revoke certain rights, he or she can write a letter of direction, diverting their responsibilities and rights to another partner within that business.
One thing that a writer of a LOD should consider is that it’s not legally enforceable on the recipient. To ensure a smooth transition within a business or that of financial assets, the writer should include the following in their LOD:
There are dozens of great examples that you can read through in order to craft the perfect letter of direction.
Why is a LOD written?
The reasons for a LOD will differ for each situation, but in some instances, it’s simply written to resolve any disputes, assist with personal finances, or ensure the transition of authority and rights from one person to another.
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