Atkins Dellow > Writing a Letter of Wishes – What you need to know

08 June 2023 | Private Client

Writing a Letter of Wishes – What you need to know

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Why do I need to write a Letter of Wishes to go with my Will or lifetime trust?

Very often a Will gives the executors discretion as to how to administer an estate. The Will or lifetime trust might create a discretionary trust which the trustees have discretion over.

A Letter of Wishes (sometimes also referred to as a Memorandum of Wishes) is something which is normally prepared by someone who sets up a trust (the Settlor) in their lifetime; or makes a Will (the Testator) which includes a trust.

It is a way of providing guidance to trustees so that they’re aware of how you, the Settlor/Testator, would like the trust to be managed and also which matters your trustees should consider when exercising their discretionary powers.

FAQs

Can I include gifts of personal possessions in a Letter of Wishes?

If you have personal possessions (for example a number of sentimental items) which you would like to gift to various beneficiaries, it can be useful to include a list in a Letter of Wishes. This is a common way to make specific gifts without the need to include long lists of items in the Will, provided the Letter of Wishes is referred to in the Will. Although your beneficiaries won’t be legally entitled to items included in your Letter of Wishes, your executors/trustees should ensure your beneficiaries receive the gifts unless they have strong reasons not to.

Can I include funeral wishes in a Letter of Wishes?

Yes – this is a typical way to include specific wishes for funeral arrangements, particularly where they might be more extensive and detailed (for example, you might want to be clear on a programme of music for your funeral service, or that the funeral arrangements are kept as economical as possible along with directions on how that might be achieved). From a practical perspective, numerous arrangements would better be catered for in a Letter of Wishes.

Guardians for minor children

If you have any children who are under 18 years old at your death, you should appoint Guardians in your Will. However, there’s often no specific direction as to how those Guardians carry out their parental role for your child/ren once you’re gone. A Letter of Wishes can provide a useful forum for your preferences/directions for those persons who will inherit parental responsibility as Guardian.

Is a Letter of Wishes legally binding?

A Letter of Wishes isn’t legally binding but is guidance that the trustees should consider and which in practice is usually followed. One of the key takeaways of a Letter of Wishes is that they can be very flexibly worded – after all, it’s a reflection of your own thoughts – a personalised message to family and loved ones as to how you want things to be dealt with after you’ve gone. Keeping such messages and directions separate from your Will also means your Will is kept clear and straightforward.

Is my Letter of Wishes kept confidential?

Yes – only in very limited circumstances would the court order disclosure of a Letter of Wishes. In contrast, your Will becomes a publicly accessible document on death.

How will a Letter of Wishes hold up if there’s a dispute?

Given that Letters of Wishes are often worded in a more relaxed non-legal fashion, it’s important to be clear on how your executors/trustees should exercise their discretion. It’s unlikely you can cater for each and every ‘what if’ scenario, so it’s paramount that you’re happy with your choice of executor/trustee and that they will make sensible decisions in line with any guidance you provide them in the Letter of Wishes.

What should be included in a Letter of Wishes?

There are no set rules about what a Letter of Wishes should include – it is up to the Settlor/Testator and very much depends on the circumstances surrounding the creation of the trust – but it shouldn’t conflict with the Will or the trust deed in any way and the following are typical directions to trustees which may be included in a Letter of Wishes:

  • Provision for the primary beneficiary (often the surviving spouse or civil partner):

– The overall circumstances in which they should benefit;
– Provision in particular circumstances that may occur – for example, if the family home was a trust asset and it was sold;
– Treatment on remarriage or cohabitation;
– The trustees should consult with them before making any dispositions.

  • Provision for children or younger beneficiaries:

– The overall circumstances in which they should benefit, for example, only when the needs of the spouse/civil partner (as the primary beneficiary) have been taken into account;
– Equal or unequal distributions between them, where some more vulnerable beneficiaries may have exceptional needs or circumstances meaning they need more financial help;
– The age at which any children should receive income and capital from the trust;
– Restrictions on capital distributions to them in particular circumstances, for example, where they are particularly vulnerable due to drug or alcohol abuse or a mental health condition;
– Provision for education;
– Provision for grandchildren if parents die;
– Treatment of children likely to divorce or become bankrupt;
– Position of stepchildren.

  • Provision for other, more remote beneficiaries (other family members, friends, charities and so on).
  • To what extent beneficiaries can receive income and/or capital or use trust assets, for example, occupying a property.

  • Whether outright distributions of capital or loans should be made.

  • Attitude towards investment risk (whether low or medium risk) and diversification of the trust fund).

  • Appointment of future trustees.

  • Attitude towards any beneficiary who challenges the terms of the trust.

  • Interaction with other trusts created by the Settlor/Testator.

  • Considering the potential tax consequences of any dispositions from the trust and to take tax advice.

  • Circumstances in which trustees should consider exercising their power to add beneficiaries (if included under the terms of the trust).

  • How long the trust should continue for.

Can beneficiaries see the Letter of Wishes?

A Letter of Wishes may also include something that you might not want someone to see. A beneficiary of a trust created during the Settlor’s lifetime may ask to see a copy of the trust deed at any time and a Will becomes publicly available to anyone after death once a Grant of Probate has been issued. The Letter of Wishes should be kept confidential and not disclosed to anyone except the trustees. The Trustees may decide to disclose it to a beneficiary at their discretion, but this should be considered carefully and on appropriate advice. A Letter of Wishes is a good place to put information relevant to the trust which may be private or sensitive.

Is a signed Letter of Wishes legally binding?

There are no hard and fast rules about what should be included in a Letter of Wishes. The more complicated the trust/Will and/or circumstances surrounding it, the more extensive and detailed the content of a Letter of Wishes may be, it is likely you will benefit from having a legal adviser draft it for you. It would certainly be advisable to ask them to have a look over anything you may have prepared as they will almost undoubtedly think of things that you probably haven’t considered.

Above all, a Letter of Wishes ensures your own thoughts can be heard after you’ve gone. If you require something more ‘absolute’ (that must go to a specific beneficiary) then it should be included in the legally binding Will – anything else, including guidance on how you prefer things to pan out after you’re gone, can be included in your Letter of Wishes.

There are many possibilities with a Letter of Wishes and you should consider going through yours to make sure its valid. If you don’t have one but are considering making on or have one but want to get it checked by a professional get in touch with our Private Client team on 0330 912 8338.

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Please note this article is provided for general information purposes only to clients and friends of Atkins Dellow LLP. It is not intended to impart legal advice on any matter. Specialist advice should be taken in relation to specific circumstances. Whilst we endeavour to ensure that the information in this article is correct, no warranty, express or implied, is given as to its accuracy, and Atkins Dellow LLP does not accept any liability for error or omission.

© Atkins Dellow LLP 2024

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