Can you dictate to trustees in your letter of wishes?
A letter of wishes is a separate document to your will, but it accompanies your will. It is not legally binding but can guide your executors and trustees to ensure that your personal wishes are carried out.
You should take care that a letter of wishes does not contain anything that could conflict with your will.
A letter of wishes can advise on anything, but the most common uses are listed below.
Who to notify of your death, or in some cases, who not to tell.
Listing your main assets - including bank accounts, life insurance policies, expensive items or jewellery and their location - will help your executors in the administration of your estate. These items should also be included in your will because the letter of wishes is not legally binding.
Guiding your executors or trustees in terms of how you would like any money managed or trusts to be run. Be careful not to be prescriptive to the extent that the discretion of the trustees is questioned. Affecting the discretionary powers of the trustees is not advisable, as it may invalidate the trust.
Advising guardians on how you would like your children to be raised, their religious upbringing, education, and where they should live. These details should be reviewed as the children grow up.
Giving more detailed information to assist your executor/s in identifying specific items that you are bequeathing in terms of your will.
Providing explanations as to why you have excluded someone from the will, if you think that it may be a controversial decision or challenged later.
A letter of wishes should be written in plain English, signed and dated, but not witnessed, so as to avoid any claim that it has become a legal will or codicil (an addition or supplement that explains, modifies, or revokes a will or part of one).
There is an ongoing debate as to the role of a letter of wishes and whether a letter of wishes should be seen as part of the trust deed.
A letter of wishes is not legally binding on the trustees, but could be taken into account by them. Where trustees have been given wide discretion in a trust instrument, it is important for them to have an understanding of what the founder had in mind when he/she created the trust, and exercise their discretion accordingly. The trustees should certainly be influenced, but never dictated to, by a letter of wishes.
If the trustees only follow the letter of wishes and do not apply their discretion, they risk being attacked by beneficiaries and creditors.
Typically, letters of wishes are concerned with the exercise of discretions in relation to the distribution of the trust fund, wholly or in part.
Occasionally, letters of wishes may include comments in relation to the exercise of powers of investment, or other purely administrative powers.
Letters of wishes should be reviewed regularly. It would be helpful if the trustees took the initiative in this and asked the founder, from time to time, if he/she had any changes in mind.
Letters of wishes should be kept by the trustees as a guide, but not as an instruction.
Phia van der Spuy is a registered Fiduciary Practitioner of South Africa®, a Master Tax Practitioner (SA) and the founder of Trusteeze®, which specialises in trust administration.
The views expressed here do not necessarily represent those of Independent Media.