What is a letter of direction?

A letter of direction is a written document issued by a financial institution that instructs the recipient to distribute funds from an account to a designated payee or account under specified terms. It contains instructions on transferring money, the amount, and the recipient's details, and ensures that funds are moved according to the account owner's wishes. Letters of direction are often used in managing investment portfolios, handling real estate transactions, and distributing beneficiaries' funds in estate administration.