Letter of wishes discretionary trust template

A Letter of Wishes is an important document used to communicate your intentions to the trustees of a discretionary trust. Unlike a legally binding will, it serves as a guideline for trustees, outlining how you would like your assets distributed according to your preferences, without restricting their discretion. Crafting a clear and precise letter can help ensure that trustees act in alignment with your desires, even though they have the final say in how the trust’s assets are managed.

Start by being clear about your intentions. While the trust deed may give trustees the freedom to make decisions, specifying certain wishes can reduce ambiguity. For example, you may want to direct trustees to prioritize the welfare of your children or provide specific guidance on the use of the trust’s assets for education, healthcare, or charitable donations.

Be mindful of the tone and language used. The Letter of Wishes should be respectful of the trustee’s role and discretion, but still offer as much detail as needed to ensure that your values and desires are considered. Keep it simple and direct; avoid complex legal terms unless necessary. This will prevent confusion and ensure that the document serves its intended purpose effectively.

Lastly, remember that the Letter of Wishes is not legally enforceable. Its purpose is to guide and inform the trustees, so it is crucial to update it regularly, especially if your personal circumstances change or if the law affecting trusts evolves. You may also want to review the trust’s terms to ensure that your letter remains aligned with the trust’s objectives.

Here’s the revised text where words do not repeat more than two or three times:

Be clear about the purpose of your letter. Clearly state how you wish your assets to be managed within the trust. Specify who will benefit from it and under what conditions. Provide the trustee with guidelines on your intentions, making sure they are precise and understandable.

Avoid vague descriptions. Focus on clear, actionable instructions. For instance, instead of saying “distribute the wealth,” explain how much and to whom. Include potential scenarios, but stay concise.

Clarify the roles and responsibilities of your trustee. It’s important that they understand both your values and practical expectations. Don’t forget to mention any conditions for distribution, such as age, milestones, or needs that must be met before the assets can be passed on.

If you want to make changes to the trust later, specify how and when those changes should occur. This keeps things flexible without confusing the trustee or beneficiaries.

Don’t leave room for ambiguity. Your letter should reflect your personal preferences clearly while allowing flexibility for unforeseen circumstances. The more detailed you are, the easier it will be for the trustee to act in line with your wishes.

1. Letter of Wishes Discretionary Trust Template

A Letter of Wishes is a critical document that guides trustees on how to manage and distribute trust assets. It outlines the settlor’s desires regarding beneficiaries, providing valuable context to help trustees act in a manner aligned with those wishes. While not legally binding, it offers significant insight into the settlor’s intentions. Below is a template for a Letter of Wishes related to a Discretionary Trust.

Template Structure

The template includes several key sections:

1. Introduction – Clearly identify the settlor and the trust being referenced.
2. Purpose – State the reason for the letter and its intent to guide trustees in their decision-making.
3. Beneficiaries – Detail the primary individuals or groups the settlor wishes to benefit from the trust, though this is not an exhaustive list. Specify any conditions or special considerations for beneficiaries.
4. Distribution Guidelines – Offer specific instructions on how and when the trustee should distribute the assets. This may include factors such as age, need, or special circumstances of beneficiaries.
5. Considerations – Indicate what should guide the trustee’s decisions in discretionary distributions, such as beneficiary health, education, financial position, and other relevant factors.
6. Additional Instructions – Provide any further guidance on particular assets, distributions, or strategies that should be taken into account.
7. Final Thoughts – Close with a reaffirmation of trust in the discretion of the trustee to act within the settlor’s wishes.

Key Recommendations

To ensure clarity, include any specific details about the trust that may be of interest to the trustees. While the Letter of Wishes is non-binding, it should reflect the settlor’s true intentions as closely as possible. Regularly updating the document is advised if circumstances or relationships change. The more specific and thoughtful the instructions, the more likely trustees will be able to carry them out effectively.

Understanding the Purpose of a Letter of Wishes in a Trust

A Letter of Wishes offers a clear guide to trustees on how you would like them to manage and distribute assets within a discretionary trust. This document, though not legally binding, serves as a helpful reference for the trustee, ensuring that your personal intentions and preferences are taken into account. It provides insight into how you would like the trust’s provisions to be interpreted, especially in cases where the trust deed is open to different interpretations.

Clarity in Decision-Making

A Letter of Wishes clarifies your expectations, particularly in discretionary trusts where trustees have significant discretion over how assets are distributed. It can include details about specific beneficiaries, amounts, and the timing of distributions, ensuring trustees have a well-rounded understanding of your wishes. This can prevent conflicts and reduce uncertainty in the administration of the trust.

Flexibility and Privacy

While the trust deed governs the legal framework, the Letter of Wishes allows for flexibility in how assets are managed without making it a rigid legal obligation. It also provides privacy, as the letter is typically not part of the public trust records, which helps keep personal details and intentions confidential among the trustee and beneficiaries.

Key Elements to Include in a Wishes Template

Include a clear statement of your wishes at the beginning of the document. This ensures that your intentions are unmistakable and sets the tone for the rest of the content.

1. Beneficiaries

Clearly define the individuals or entities that will benefit from the trust. List their full names and any relevant details about their relationship to you. Specify if there are conditions for their inheritance, such as age requirements or specific milestones they must reach.

2. Trustee Instructions

Provide guidance on how the trustee should administer the trust. Detail any specific instructions or preferences you have regarding investments, distributions, and general management of assets. Be as specific as necessary to avoid confusion.

3. Asset Distribution

Describe how assets should be divided among the beneficiaries. Include details on the proportions or specific items (such as properties, shares, or cash) each beneficiary should receive. Consider including alternate distributions in case certain beneficiaries are unable to inherit.

4. Personal Notes or Requests

If applicable, add personal messages or requests to your beneficiaries. These might include suggestions for how they might use their inheritance or guidance on how to manage the assets received. Personal notes help ensure your wishes are carried out in the manner you intend.

5. Contingency Plans

Address potential changes in circumstances by outlining what happens if a beneficiary predeceases you, or if any unforeseen event occurs. Contingency plans ensure that your intentions are met regardless of changes after the document is written.

6. Review and Update Schedule

Recommend a regular schedule for reviewing and updating the letter to ensure it reflects your current wishes. Life circumstances and family situations can change, so it is important that the letter is always up-to-date.

How to Customize the Letter Based on Beneficiary Needs

Identify the unique circumstances of each beneficiary before drafting the letter. Consider their age, financial situation, health status, and specific goals. Tailor the language and recommendations accordingly to address their individual needs. For example, for a young beneficiary, focus on long-term investment strategies or education funding. For an older beneficiary, prioritize financial security and medical care provisions.

Specify the types of assets that should be directed towards each beneficiary. If one beneficiary has special needs, include provisions that outline the management of their inheritance to ensure it is handled appropriately, either through a trustee or specific care provisions.

If beneficiaries have differing levels of financial responsibility, adjust the instructions on how funds should be used. For those with minimal experience managing money, suggest oversight by a trusted advisor or set clear limits on their access to large sums. For those more experienced, allow them greater flexibility in managing their inheritance.

Clarify any conditions that might affect a beneficiary’s access to their inheritance, such as achieving specific milestones like completing education or maintaining health. This ensures that the trust aligns with their personal goals and circumstances while maintaining fairness among all beneficiaries.

Review and update the letter periodically as beneficiaries’ needs evolve. What works today may not be suitable in the future, so remain flexible and willing to adapt the letter to ensure it continues to meet the intended purpose.

Common Pitfalls to Avoid When Drafting a Wishes Document

One of the most common mistakes when drafting a letter of wishes is failing to be clear and specific. Ambiguous language can lead to confusion among trustees and beneficiaries, leaving room for differing interpretations. Ensure your wishes are stated in straightforward terms, leaving no room for misinterpretation.

1. Lack of Specificity in Beneficiary Instructions

• Provide clear directions on how assets should be distributed. If you wish to direct certain assets to specific individuals, state it plainly.
• Be explicit about any conditions for receiving assets, such as age or milestone achievements, to avoid confusion later.

2. Overlooking the Powers of Trustees

• Ensure trustees understand their role and responsibilities. Be clear about their discretion in managing and distributing the assets.
• Avoid leaving vague instructions that could potentially lead to disagreements between trustees or challenge their authority.

3. Failing to Update the Document

• Review your letter regularly, especially after significant life events, such as a change in relationships or financial status.
• Keep the document current to ensure that your intentions reflect your present circumstances and wishes.

4. Not Considering Potential Tax Implications

• Consult with an advisor to understand any tax liabilities associated with the assets you wish to pass on, to ensure your beneficiaries aren’t caught off guard.

5. Overcomplicating the Document

• Avoid overly complex instructions that may be difficult to implement. The more straightforward your wishes, the easier they are for trustees to follow.
• Be mindful of the document’s length; excessive detail might lead to confusion or errors in execution.

How to Address Conflicts or Disputes in the Wishes Letter

Disputes may arise if there are ambiguities or conflicting instructions in a Letter of Wishes. To minimize the risk of such issues, clarity is key. The letter should outline specific intentions in clear terms, avoiding vague language that could be misinterpreted. If discrepancies occur, the trustee should seek guidance from a legal professional or mediator familiar with the trust’s terms.

1. Specify Dispute Resolution Mechanisms

Including a defined dispute resolution process in the Letter of Wishes can prevent conflicts from escalating. For example, you might designate a neutral third party or professional mediator who can help resolve disagreements fairly. Clearly outline how the dispute resolution should unfold, including timelines and specific steps to follow. This provides a practical way to address issues without court intervention.

2. Address Common Areas of Disagreement

Anticipating potential points of contention can prevent delays or confusion. Areas such as the interpretation of the trust’s intent, how assets are distributed, or how different beneficiaries are treated may lead to misunderstandings. Clarify how decisions should be made in such cases, and outline a process for updating the letter if needed to adapt to unforeseen changes.

3. Use a Structured Table to Illustrate Key Points

Conflict Type	Recommended Action
Ambiguities in Instructions	Provide clear, specific language with examples where necessary.
Disagreements Among Beneficiaries	Designate a neutral third party or mediator to resolve issues.
Dispute Over Asset Distribution	Clarify any special conditions, including specific items or financial values.

By clearly outlining procedures for handling conflicts in the wishes letter, you not only reduce the likelihood of disputes but also provide a clear path for resolving any issues that may arise. This approach maintains the integrity of the trust and helps preserve the family or beneficiary relationships over time.

Reviewing and Updating the Document for Ongoing Relevance

Regularly reviewing the letter of wishes ensures it remains in line with your current intentions and circumstances. As personal situations, financial conditions, or even laws shift, your trust document may need revisions to reflect these changes. Make it a habit to check the document at least every 2-3 years or after any significant life event, such as marriage, the birth of children, or a change in your financial status.

Revisit Key Sections

Look over the main points of your letter, particularly those that deal with asset distribution, trustee instructions, and beneficiaries. If your relationships or objectives have shifted, adjust the document to reflect new priorities. For example, adding new beneficiaries or altering the way assets are distributed based on current needs is crucial.

Consult with Your Lawyer or Trustee

Collaborate with a legal professional to ensure that the letter aligns with any legal changes, such as tax laws or inheritance regulations. It’s also an opportunity to check if the trustees are still capable and willing to manage the trust as you intended.

Finally, document any changes clearly and store the revised letter with the original trust paperwork, ensuring it remains easily accessible for future reference.

When creating a Letter of Wishes for a discretionary trust, ensure you clearly outline your desires regarding how the trustee should manage the trust’s assets. Here are the key elements to include:

1. Beneficiaries: Specify the individuals or groups you wish to benefit from the trust. Be as clear as possible, naming each beneficiary and, if needed, providing their relationship to you.
2. Distribution Guidelines: Provide specific instructions on how you would like the trust’s assets distributed. This can include guidelines for periodic payments, lump sums, or asset allocation based on life events or needs.
3. Trustee’s Discretion: While the letter provides guidance, make it clear that the trustee has the discretion to act in the best interests of the beneficiaries, even if those actions differ from your letter’s recommendations.
4. Special Instructions: Include any unique circumstances that may affect the distribution, such as educational needs, medical expenses, or support for specific life events like marriage or starting a business.
5. Review and Updates: Consider recommending that the letter be reviewed periodically. Circumstances change, and regular updates ensure that the letter remains aligned with your wishes.

Make sure the letter is kept in a safe but accessible place, and inform the trustee where to find it. Always consult with a legal advisor to ensure the letter complements the trust’s legal framework.