What Is A Letter Of Wishes?
A Letter of Wishes is essentially a letter from you to future trustees, with your instructions on how you would like your Trust to be run. There’s no prescribed form or format you need to follow when writing a Letter of Wishes, but it should be written in a way that you and the future trustees of your Trust will easily understand.
While you’re managing your Trust, you are able to control what happens. You can make decisions about what happens with assets and income as part of the day-to-day running of the Trust.
Before you pass away, or hand over control of the Trust to someone else, your Trustees need to know what to do. Some people have special situations they need to provide for. You may have children with long-term medical issues, or perhaps pay a scholarship to grandchildren to pursue education, sporting or cultural interests. Alternatively, you may want to protect the assets from family members with a reputation for spending. These are the sorts of situations that trustees in the future need to know about. This is where a Letter of Wishes comes in.
Writing Your Own Letter of Wishes
Of course, you can write a Letter of Wishes yourself for your own Trust. You don’t need legal help to write one. However, few trustees have heard of them, and even fewer have written one for their own Trust.
What instructions should you put in your Letter of Wishes? It’s ok if you’re not sure where to start. Because we have helped many people over the years protect their Family Trusts, we can help you get started on your own Letter of Wishes, and perhaps suggest some ideas you hadn’t considered.
Our preferred process is to prepare a draft for you, and for you to tailor that draft to make sure it reflects your Trust and is tailored to your own needs. You can involve the team at Godfreys Law as much or as little as you would like to get the job done.
Setting Course For Your Family Trust
With the modern New Zealand Discretionary Trust, in which there are no fixed entitlements, we can make it very clear what your trustees should do in the future. Choosing your trustees is one of the most critical parts of the process. You need people you trust, and who will do what’s expected of them as a trustee. After choosing your trustees and keeping minutes, a Letter of Wishes is the most important thing you need to do with your Trust.
By not having a Letter of Wishes you are relying on your trustees’ good nature and memory of what you might have wanted. That’s where people can go off track. If you have a trustee with strong views or some personal agenda, the purposes of the Trust might not be met. Trustees are not obliged to follow what is in the Letter of Wishes, as it is just for guidance. If you choose your trustees carefully, you can be sure they’ll do what you want.
Do you have a Family Trust? Want to make sure it will keep your wishes after you’ve passed on? If you want to know more about Letters of Wishes and making sure your Trust is fit for purpose, contact the team at Godfreys Law.