APS Legal & Associates

Letters of Wishes. What are they and do they work ?

A good article on the pros and cons of Letters of Wishes;
Ensuring that you provide for multiple beneficiaries in your Will can be tricky, especially when their individual life circumstances are prone to change. With second marriages, cohabitation and step-children, families these days are more complicated than they used to be which only compounds this difficulty. Some people choose to leave their assets in a discretionary trust, employing their trustees (usually several family members or a solicitor with whom they have a long-lasting relationship) to decide what to do for the best.

To guide the trustees in managing the estate assets, letters of wishes are commonly attached to Wills as a means of setting out the thinking behind the way in which the Will has been set up, and to place parameters – for example granting your partner a right to remain in the property you own, but allowing the trustees to sell the property if one or more of your children ends up struggling financially, or experiences a marriage breakdown, for example.

Issues with Letters of Wishes
Problems can arise though when your surviving relatives feel that their circumstances justify a departure from the letter of wishes. Alternatively, the wording of the letter can be open to misinterpretation and this is a common cause of disputes surrounding estates. To be fair, some letters of wishes are fairly relaxed in wording to allow the trustees to exercise their discretion in a way that they deem appropriate. It is also true that everyone interprets changing circumstances differently – a problem which may seem trivial to one person could be quite dramatic or concerning to another.

The recent decision in Taulbut & Others v Davey (2018) demonstrated that the language used in letters of wishes can be particularly critical. In this particular case, the letter of wishes provided that a charitable trust would be set up, and the money from that trust may be used by the charity in question. The letter of wishes did say that one of the beneficiaries (who was also a trustee) “may be” entitled to receive £95,000 from the trust fund if she became a widow. It was held by the Court that this did not entitle her to the money. In this case, the Court gave consideration to the wider circumstances, including the fact that the charity was entitled to use the trust money in the interim, and may be placed at a significant disadvantage if it had to repay a beneficiary later.

Letters of Wishes – Things to Consider
It is certainly advisable to ensure that your letter of wishes is worded carefully and/or that your solicitors have taken a detailed note of your intentions as these will be considered by a Court if there is a dispute. If you are going to guide the trustees in exercising their discretion, you are best advised to talk to your solicitor about the various possibilities that can arise, and craft your letter of wishes so that it covers every realistic eventuality. That said, you cannot cover everything and there are some circumstances that you cannot legislate for. This is why it is important to ensure that your trustees can be relied on to make sensible decisions.

Any beneficiary who feels that a Will has not catered for them correctly, or that the trustees appointed to administer the estate are not acting fairly or reasonably, may be able to bring a claim against the estate. If you are in this situation, it is best to seek advice on where you stand. If on the other hand you are faced with a claim from a fellow beneficiary, or if you are a trustee and you feel concerned about how to respond to a claim, then similarly it is best to seek advice before making a decision.

Most claims settle and indeed some of them settle before formal court proceedings have started. Meetings can be arranged between beneficiaries which give them an opportunity to air their views, and no matter where you stand in a dispute, mediation is always an option you should consider. Mediation often results in a settlement, and you are usually expected to have taken part in mediation before proceeding to trial. Failure to do so can sometimes lead to you being ordered to pay the costs of the other parties, even if you succeed at hearing.Lewis Hastie.

Posted in Blog | Comments Off on Letters of Wishes. What are they and do they work ?