A Letter of Wishes is also known as a ‘Memorandum of Wishes’ or ‘Note for Guidance for Trustees’. 

It is a formal non-binding document that accompanies a trust deed or will, and expresses the intentions, preferences, and/or desires of the settlor(s) (the person/people who create the trust) or testator (the person who makes a will) regarding the management and distribution of their assets.

While a Letter of Wishes is not legally binding on the trustees or executors (meaning they are not legally compelled to follow its instructions), it provides invaluable guidance.  Trustees and executors are expected to give due consideration to these wishes when making discretionary decisions, as they illuminate the settlor's or testator's intent. They are generally unlikely to be ignored unless unusual circumstances arise that necessitate a deviation from the expressed wishes, such as unforeseen changes in beneficiaries' circumstances or market conditions.

Key Characteristics of a Letter of Wishes

Informal Nature

A letter of wishes is not a legally binding document and does not have the same formal requirements as a trust deed or a will. However, it should be clear and well-articulated to convey the settlor’s intentions effectively.

Guidance for Trustees or Executors

The primary purpose of a letter of wishes is to provide guidance to the trustees of a trust or executors of a will on how the settlor or testator would like their affairs to be managed and how assets should be distributed. This can be particularly helpful in complex family situations or where the trust or will may be open to interpretation.

Flexibility

Since it is not a legally binding document, a letter of wishes can be updated or changed at any time by the settlor or testator without the need for a formal legal process. This flexibility allows individuals to adapt their wishes to changing circumstances.

Common Contents of a Letter of Wishes

A letter of wishes may include various elements, such as:

Distribution Preferences

The letter can outline how the settlor or testator wishes their assets to be distributed among beneficiaries, especially in cases where specific items or amounts are intended for certain individuals.

Trustee Guidance

The letter can provide guidance on how the trustees should administer the trust, including investment strategies or specific considerations regarding particular beneficiaries.

Family Dynamics

It may address family dynamics or relationships, providing context that can help trustees or executors understand the settlor’s or testator’s intentions.

Personal Messages

A letter of wishes can include personal messages or sentiments for beneficiaries, which can help convey emotional significance and provide comfort.

Legal Considerations

While a letter of wishes is a useful tool, it is essential to understand that:

• Non-Binding: The letter is not legally enforceable, meaning trustees or executors are not obligated to follow the wishes expressed in it. However, it can influence their decision-making.
  
  
• Complementary Document: It should be used in conjunction with a formal trust deed or will, as it does not replace these legal documents. Proper legal documentation is necessary to ensure the wishes are executed according to the law.

Conclusion

In summary, a letter of wishes serves as an informal but valuable document that expresses the intentions and preferences of a settlor(s) or testator regarding the management and distribution of their assets. While it is not legally binding, it provides essential guidance to trustees and executors, helping them make decisions that reflect the settlor's or testator's desires. For individuals creating trusts or wills, drafting a letter of wishes can enhance clarity and communication regarding their intentions. It is advisable to consult with legal professionals when preparing a letter of wishes to ensure it aligns with the overall estate planning strategy.

For guidance on how to write a letter of wishes click here: How to Write a Letter of Wishes