What is a letter of wishes and how should I use one?
They are non-legally binding documents that accompany Wills and trusts, normally expressing the personal wishes of the person making the Will (‘testator’) or trust (‘settlor’) about how they would like things done or important personal information that is desired to be kept outside of the Will.
Examples include a letter accompanying a Will, perhaps written to the guardians of minor children and expressing wishes regarding children’s upbringing, schooling, religion, disciplining, likes and dislikes, allergies and so on, or perhaps concerning the distribution of personal belongings such as jewellery or other personal items.
Other letters can give trustees information about how a settlor envisages any trust money being used and when (e.g. ‘I wish the trustees to use the trust funds for my wife primarily but if she has sufficient income and capital for now and in the future, then my trustees should take advice on giving trust assets to my children if they are adults and suitably grown up in my trustees’ opinion’).
Finally, letters of wishes can drawn the trustees’ attention broadly or specifically to the need to investigate and/or take advice on tax planning opportunities and other financial matters such as investment, or private information about how any business assets or company matters could be dealt with.
The main purpose of a letter of wishes is to (a) reassure the settlor that the trustees will take his or her views into account having removed funds or assets from his or her control and (b) provide useful and reassuring information and guidance for the trustees when making potentially difficult decisions in the future at a time when the testator or settlor is perhaps no longer alive and able to communicate that information.
What else do I need to know about them?
One the most important things to appreciate about a letter of wishes is that they are not legally binding and it should therefore be described as such in the document itself. If any wishes are intended to be legally binding then thought must instead be given to incorporating those wishes as legally effective directions within the Will or the trust itself.
However, it is often the case that personal wishes are best kept out of Wills and trusts for fear that they might affect the intended taxation consequences of any trust in a Will or any other type of trust created. Similarly, it is important that any letter of wishes dovetails with the provisions of the Will so as to avoid any doubt about what the testator’s true intentions were.
A letter of wishes is usually intended to be confidential to the trustees (a Will becomes a public document once a grant has issued in connection with it). Since the letter of wishes should be confidential, the scope for personal input, creative language and expression of opinion is more feasible and potentially helpful.
There is an argument that letters of wishes are not now as assuredly confidential as in the past, since the court can decide what documents should be disclosed and to which beneficiaries. For that reason, some practitioners have moved towards preparing a note based on a telephone call or meeting with their client, which is assured of confidentiality and less vulnerable to claims for disclosure by unhappy beneficiaries.
Can it be changed?
Yes, and it should be regularly reviewed and considered in the light of changed circumstances if it is to be of any practical use. Many clients revise their own letters of wishes and hand them to their solicitor with a request that it is reviewed and used to replace the current one.
When should I sign it?
It is normally signed after a Will or trust is signed, but it is suggested that it is signed at a different time to the Will or any trust document, to be consistent with the argument that it has not been incorporated as part of the Will or trust and is therefore a disclosable document in certain situations. For that reason, it is sometimes explicitly expressed in the letter of wishes itself that it is not a part of the original Will or trust.
How long should they be?
How long is a piece of string? Do not be afraid to write a ‘War and Peace’ effort if you need to get down your thoughts for your own comfort. A letter of wishes can be brief or very long and detailed, but they are normally most effective if they are well thought through, consistent and personal. We recommend that you prepare your letter or letters of wishes under your solicitor’s guidance in case the content might otherwise cause unanticipated difficulties in the future.
Should my solicitor write it or should I?
Normally it works best when your solicitor either prepares a first draft for you to work on yourself substantively, or gives detailed guidance on the structure and content before it is written by you. The important thing is to give proper consideration to writing a side letter to your Will since it is normally necessary and important rather than an ‘add-on’. There is no ‘standard’ letter of wishes, it needs to be the product of careful and clear thinking if it is to serve the purposes it is designed for.