Cobham Will writer Alex Truesdale explains why Letters of Wishes are an essential part of any estate planning toolkit
Letters of Wishes are the unsung heroes of effective estate planning. They provide executors and trustees with insight into a testator’s preferences, which is impossible within the formal confines of a Will. However, they are often overlooked by both practitioners and clients.
Personal financial affairs
Once mental capacity has been lost, without an LPA sole and joint bank accounts cannot be operated; transactions involving the sale, purchase or letting of real property are disrupted; and proceeds of life assurance or critical illness policies and long term sickness benefits cannot be accessed.
Reasserting control over the financial affairs of a patient without an LPA involves applying to the court for a ‘deputyship’ which is time-consuming, expensive and intrusive.
Simple Wills might cover the basics, but they are often written in inflexible, mandatory language and can lead to disinheritance and disputes – especially where a second marriage has taken place or where a single testator has multiple beneficiaries.
Discretionary Will trusts are particularly useful – once basic parameters have been set (which assets should be covered, who the beneficiaries are) it is up to the trustees (usually the executors) to decide who gets what, when and on what terms, respecting their duty to act in the best interests of the beneficiaries. But how to balance those interests? Executorship in the simplest of situations can be a burden, and leaving friends and relatives to referee between competing beneficiaries can be an unwelcome legacy.
This is where Letters of Wishes are useful, providing non-binding guidance to trustees on how to run the trust – where to invest funds, timescales and objectives, and when to payout. They give insight into the testator’s preferences, and whilst they cannot limit a trustee’s discretion, in practice, few trustees depart from such guidance, especially if professionally appointed.
You don’t have to include a trust in your Will to use a Letter of Wishes; they can enhance even the simplest Will covering a range of practical issues:
• Who to inform of your death (and sometimes, who not to tell; funerals are public events but there is no obligation to advertise them);
• Whether you wish burial or cremation, if you have a prepaid funeral plan and the kind of service and/or wake you would like;
• What and where your main assets are, to help your executors make an accurate declaration of your assets to HMRC;
• If you are appointing lay executors, which professionals they might approach for assistance.
Letters of Wishes often mention personal items, over which many testators agonise due to their sentimental value. You can specify in your Letter of Wishes who gets what, and as they are informal documents, easily update them without formal witnessing requirements. However, if you want to add beneficiaries or change executors, you will need to amend your Will formally.
Some testators need to explain why ‘surprise’ legacies have been made, or defend excluding beneficiaries. Setting out your reasons can help to head off legal disputes, and as Letters of Wishes do not have to be admitted formally to probate, they remain private. Once the situation has resolved, they can be updated, leaving any unpleasantness in the past.
Letters of Wishes can provide invaluable guidance to guardians over how you would wish your children to be raised in your absence. Education, travel, religion and enrichment can all be covered as well as the maintenance of family ties and relationships with friends. They are particularly powerful where the family has an international element and the possibility of relocation abroad may arise.
Alex has helped many clients write their own Letters of Wishes, and it can be an intensely emotional experience. As there are no formal language requirements, they can truly speak from the testator and may well be the last direct communication their family receives.
The emotive power of a letter lovingly setting out a parent’s hopes for their children’s upbringing and how and when they should benefit from the estate, should never be underestimated: Alex’s own late father’s Letter of Wishes remains in her desk drawer, as a lasting symbol of his love.
An appropriately worded Letter of Wishes can be the ‘Swiss Army knife’ of any estate plan. But as the old Scottish proverb says, “If wishes were horses, beggars would ride!”: knowing you should do something about your Will and Letter of Wishes is no substitute for action…
This article was featured in The Elmbridge and Kingston and The Richmond and Barnes Magazines in November 2020.