What is a Letter of Wishes?

C. Mitchell

Nearly every country in the world has a system for people to pass on their assets, equity, and material goods after death. Trusts, and often times letters of wishes, are an integral part of that system in most countries, including the United States, Australia, Canada, and most of Europe. Trust instruments are legal instruments that set out the parameters on how money and assets from an estate must be distributed and used. A letter of wishes is a more personal note from the deceased that accompanies a trust and indicates how the deceased intended the trustee to handle the trust’s assets. A letter of wishes is not binding at law and cannot compel a trustee to act in any certain way, but can shed light on what the deceased was thinking when he or she set up the trust in the first place.

A letter of wishes may express love or gratitude to a friend.
A letter of wishes may express love or gratitude to a friend.

Trust instruments are characterized by their ability to set up a pattern for asset distribution over time. Discretionary trusts stand alone; if created within or by a will, the trusts are testamentary trusts. Unlike a will, which stipulates distribution of assets immediately after death, a trust establishes a longer-term distribution scheme. For instance, while a will might designate a certain amount of money to be given to a grandchild, a trust could set up a scheme whereby that grandchild would receive a fraction of that amount every year for a fixed amount of time. Trusts can also be designed to distribute assets and funds on the satisfaction of certain criteria, such as graduating with a higher degree, or reaching a certain age.

Nothing in a letter of wishes is legally enforceable.
Nothing in a letter of wishes is legally enforceable.

Because trusts demand careful attention to distributions over time, they require management by a trustee — an individual responsible for overseeing and executing the trust. The trust instrument names the trustee, who is usually a family member or trusted family lawyer. The drafter of a trust often includes a letter of wishes with his or her trust, addressed to the trustee, that seeks to clarify his or her intentions in more detail than the trust instrument itself could. Trusts are usually drafted in legal language so that courts of law can enforce them. They name names, but are generally devoid of much personal detail or emotion. A letter of wishes can fill in those gaps.

Letters of wishes are not legally binding under the property laws of any country. They are instructive only, and a trustee can deviate from a letter’s instructions if he chooses. The idea behind a letter of wishes is not to set out still more terms of a trust, but rather to explain what the trust was intended to accomplish in more simple, personal terms.

Some letters of wishes express love or gratitude to family members and friends, and they often give reasons for why certain distribution decisions were made. They set out hopes for the future, and ideas for how their assets will be used; they justify the trust’s stipulations, and explain the inheritance distribution scheme. Letters of wishes really are but wishes. They can attempt to add additional terms or conditions on the trust, which a trustee can choose to follow, but nothing in a letter of wishes is legally enforceable. In other words, a dissatisfied beneficiary cannot generally ever sue for fulfillment of actions set out in a letter of wishes if those actions are not also set out in the trust instrument.

A letter of wishes may explain how an inheritance is to be distributed.
A letter of wishes may explain how an inheritance is to be distributed.

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