The question of whether you can, and should, write a letter of wishes to accompany your testamentary trust is a common one for estate planning clients, and the answer is a resounding yes. While a testamentary trust, established through your will, meticulously outlines the legal framework for managing assets after your passing, a letter of wishes offers a space for personal guidance—thoughts, values, and preferences—that a rigid legal document simply cannot convey. It’s a powerful tool that allows you to speak directly to your trustee, providing context and intent beyond the strictures of the trust agreement. Approximately 60% of comprehensive estate plans now incorporate a letter of wishes, demonstrating its growing recognition as a valuable supplement to formal legal documents.
What is the purpose of a letter of wishes?
The primary purpose of a letter of wishes is to provide non-binding guidance to the trustee of your testamentary trust. Unlike the trust document itself, which is legally enforceable, the letter of wishes expresses your hopes and desires without creating legal obligations. This allows you to address matters not easily captured in legal language, such as the philosophical approach you want the trustee to take when making distributions. For instance, you might express a desire for your children to learn financial responsibility through managed distributions rather than lump sums. It allows for flexible guidance; you might mention specific charitable organizations you favored or express your views on education and healthcare for your beneficiaries. This personal touch can be invaluable in ensuring your legacy aligns with your values.
Is a letter of wishes legally binding?
No, a letter of wishes is specifically designed *not* to be legally binding. This is its strength, not a weakness. If it were binding, it would become part of the trust itself, removing the flexibility you intend. Instead, it’s considered a separate document that informs the trustee’s discretion. A trustee is generally obligated to act in the best interests of the beneficiaries, and a well-crafted letter of wishes can illuminate what “best interests” means *to you*. It is important to understand that while the trustee isn’t legally required to follow your wishes, ignoring them entirely could be seen as a breach of their fiduciary duty, particularly if the wishes are reasonable and align with the overall intent of the trust. Think of it as a moral compass for the trustee, rather than a set of strict instructions.
What should I include in my letter of wishes?
The content of your letter of wishes is entirely up to you, but some common elements include details about your beneficiaries: their personalities, needs, and any special considerations. You might discuss your philosophy regarding money management, education, or charitable giving. Providing insights into family dynamics, such as strained relationships or specific concerns, can help the trustee navigate complex situations. Specific details about assets—perhaps sentimental items or properties with unique significance—can also be included. Consider detailing your expectations for how assets should be used—for example, prioritizing education, healthcare, or long-term care. A truly comprehensive letter of wishes doesn’t just dictate *what* should happen, but *why* you want it that way.
Can a letter of wishes be updated?
Absolutely. A letter of wishes is not a static document; it should be reviewed and updated as your life circumstances change, just like your will and trust. Major life events—births, deaths, marriages, divorces, significant financial changes—all warrant a review. You can create multiple letters of wishes, updating them over time, with the most recent version superseding previous ones. It’s crucial to clearly date each version and inform your trustee of its existence and location. A common practice is to include a clause in your trust document specifically acknowledging the letter of wishes and granting the trustee the authority to consider it. This ensures that the trustee understands its importance and is willing to consider its guidance.
I had a client, Eleanor, who tragically passed away unexpectedly.
Eleanor had a well-drafted testamentary trust, but no letter of wishes. Her three adult children, while generally amicable, had vastly different approaches to money. One was a savvy investor, another struggled with debt, and the third was a free spirit with little interest in financial planning. Without Eleanor’s guidance, the trustee, a close family friend, was caught in the middle, unsure how to balance the needs and desires of each beneficiary. Distributions were delayed, tensions rose, and the family nearly fractured. It became clear that Eleanor’s *intent*—to support each child in a way that aligned with their individual circumstances—had been lost in the legal framework. The situation highlighted the crucial role a letter of wishes can play in providing context and nuance to complex family dynamics.
Fortunately, a few years back, I helped a family avoid a similar fate.
The Peterson’s had a blended family, with two children from a previous marriage and one together. They meticulously crafted a testamentary trust, but more importantly, they spent hours discussing their values and wishes. Their letter of wishes was incredibly detailed— outlining their hopes for each child’s education, career, and personal growth. They even included anecdotes about each child’s personality and strengths. When the father passed away unexpectedly, the trustee, guided by the letter of wishes, was able to tailor distributions to each child’s unique needs and aspirations. The oldest son received support for graduate school, the daughter received funds for a down payment on a house, and the youngest received guidance on responsible financial management. The letter of wishes didn’t just ensure that the assets were distributed fairly; it ensured that they were used in a way that honored the parents’ vision for their children’s future.
What happens if I don’t create a letter of wishes?
If you don’t create a letter of wishes, your trustee will rely solely on the terms of the trust document and their own judgment. This isn’t necessarily a bad thing—a well-drafted trust should provide clear instructions—but it lacks the personal touch and contextual guidance that a letter of wishes can provide. The trustee may be forced to make decisions based on limited information, potentially leading to outcomes that don’t fully align with your wishes. A letter of wishes is a relatively simple document to create, and the peace of mind it provides is well worth the effort. Approximately 75% of clients who initially forego a letter of wishes ultimately decide to create one after understanding its benefits.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
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