Letter of wishes and trusteeship: how to convey valuable information

Feel free to reach out to PSG Wealth Adviser  Tian Ebersohn directly.

I have recently had a discussion with someone on wills, trusts and the kids’ needs if she and her husband were to die unexpectedly. She is aware of the fact that their family trust stipulates that the trustees should use the trust assets to provide for the needs of their minor children.

Although a proper will and trust deed would make provision for the education, maintenance and care of heirs and beneficiaries, the trustees are not always familiar with the unique circumstances of the family. Every family is different, and children are unique. This means generic provisions in trust deeds, although often sufficient, are not always the best solution.

Appointing a confidant as a trustee

Quite often, the institution drafting your will is also appointed as the corporate trustee of a trust. This is not inappropriate, but it may be beneficial to appoint a confidant as a co-trustee. This confidant may be the guardian you select to look after your children if you die, but may also be a family member who is familiar with your specific circumstances and family dynamics. However, it is important not to appoint only a guardian or family member, but to nominate this person together with an independent corporate trustee.

Letter of wishes

Few people know what a letter of wishes entails and how it can be used to provide guidance to trustees, enabling them to adopt a more personal approach in executing their fiduciary duties.

It is important to note, from the outset, that a letter of wishes is not legally enforceable. It cannot replace the wording of a will or trust deed, and the author should take care to ensure it is not interpreted as an attempt to retain some control over trustees, which may have unintended consequences.

A letter of wishes has various uses and may be directed at various individuals. It plays a vital role serving as a guideline to executors, trustees, guardians, and heirs as well as beneficiaries of trusts.

What can be included in a letter of wishes?

Among other things, the more general information may include instructions on the way personal items bequeathed to heirs should be dealt with. Other important uses are to provide specific information or guidance to the trustees of a trust and the guardians of minors regarding making funds available from the trust. There may be some delicate family considerations trustees and guardians should take note of.

Other reasons why a letter of wishes may be drafted include providing guidance on the following:

-              Information about the deceased’s preference in terms of a funeral or cremation

-              Care for pets and specific arrangements in this regard

-              Donations to charities – guidance to trustees

-              Bequeathing inexpensive sentimental items to heirs: typically to avoid a lengthy list in the                   will

-              Explanatory notes: Reasons for certain bequests / why some people are excluded from a                     will, etc.

-              Children’s education / training: preferences in terms of universities / schools

-              Religion: parents’ religious preferences

-              Family members and friends the children should preferably stay in touch with

-              Lifestyle choices the parent wants the children to follow.

Although a letter of wishes is not legally enforceable the individuals involved usually take note of the content. It is important not to have a conflict of interests with official documents such as a will or trust deed.

As mentioned above, a letter of wishes is a powerful instrument to provide specific information or guidance to individuals after one’s death. It is a lot more personal and typically contains information you won’t find in, for instance, a trust deed. Use it to convey your wishes to individuals when you are no longer able to do that.