A letter of wishes: it’s not a Christmas wishlist, a bucket list or letter containing fairy dust and a rainbow, but a letter of guidance. It is an estate planning tool that can be useful (or sometimes a hindrance) in interpreting a person’s will – particularly when it comes to the intangible things you’d like to include in your estate planning.
What is a Letter of Wishes?
A letter of wishes, also called a memorandum of wishes or a statement of wishes, is not a legally binding document. It is often prepared in conjunction with a will, but does not form part of the will. It is a document that enables you to give guidance to the executors or trustees of your estate after you are gone. You are not obligated to complete one as part of your estate planning, but it can be helpful if prepared with the help of a professional. Unlike a will, a letter of wishes is a document that can remain confidential, to be used by those it is addressed to (which is usually the executors or trustees of the estate). Beneficiaries are not entitled to a copy
A will would be extremely cumbersome if it contained a listing of all of the Testator’s personal items and who they were to go to. A letter of wishes is particularly helpful for suggesting what should happen to personal items that may not have major monetary worth, but have sentimental weight and worth. Although a letter of wishes is not binding, it can help to stop any squabbles over the estate.
Some Reasons For Including a Letter of Wishes in Your Estate Planning
There are a few good reasons why you might include a letter of wishes as part of your estate planning:
- You have personal items that you’d like to go to certain people.
- You’d like to provide some direction to the guardians of your minor children.
- You want to provide instruction on how money from a testamentary discretionary trust is to be administered.
- There may be a family business you’d like to provide guidance for regarding the continued and future management of that business.
- You’d like to provide an explanation as to why you decided certain things in your estate planning and distributed the estate in the way that you have.
- Any charities that you’d like the executors to consider supporting
What to Include in Your Letter of Wishes?
The letter itself is not a vehicle for distributing your estate – that is the function of your will. The purpose of the letter is information. It provides your executors and trustees with enlightenment about your intentions and the rationale behind the creation of your estate plan. Some of the matters that you might include in your letter of wishes include:
- Funeral arrangements and requests. You probably won’t be the first person to request ‘Run to Paradise’ by the Choirboys as the last song at your funeral.
- Whether you’d like to be buried and cremated. Although there are certain laws that need to be adhered to with both of these options, this document could be the place to suggest where you’d like your ashes to be scattered.
- Whether you’d like to be an organ donor and the circumstances around this.
- Instruction to the care guardians of your children (about anything including education, holiday wishes, hopes for the sport they might choose).
- What to do with non-estate assets (like self-managed superannuation funds or jointly owned assets).
- How you’d like beneficiaries to use their inheritance (to help pay off debt or purchase a home)
- Supply the details for any trusted advisers who may come in handy for the executors or trustees. For example, the letter of wishes may include your financial adviser or accountant’s details.
Help or Hindrance?
A letter of wishes becomes a hindrance if it does not align with your will. You do not want it to create conflict or uncertainty with your will or it could spell disaster with for what you really intend with your estate. There is less likely to be an issue if the letter of wishes is prepared at the same time as the will. If it is made at a later date or written when you have a testamentary capacity that is questionable then there could be unintended outcomes for your estate planning. It should always be written with the legal guidance of a specialist in wills and estates, who is preparing the rest of your estate planning.
Great caution and skill must be exercised by practitioners when drafting letters of wishes to ensure that the documents cannot be considered an informal will.
Remember that a letter of wishes is not binding, but a guidance tool for your executors or trustees that does not have to be adhered to. Executors are not obliged to follow your guidance. A letter of wishes is not suitable to every situation, but are definitely something to consider.
If you have not completed a will, then now is the time to get started. As part of making a will you need to include executors. It’s essential that you choose people trustworthy to be your executors. These are those persons responsible for administering your estate after your death. You should make a first choice of persons to be your executors, a second choice and, in our view, even a third choice. This is important because any executor or executors appointed by you may not be living when you die, may be incapacitated or may simply refuse to act as your executor/s. Although you cannot force someone to become your executor, you need to choose willing people whom you trust, who are sensible and who would wisely seek legal advice about administering your estate.
For estate planning advice please contact us today. We offer a free, 10-minute phone conversation with one of our experienced estate lawyers.