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Who does a trustee have to show a memorandum of wishes to?

A memorandum of wishes, also called a letter of wishes, is essentially a private document within which a settlor (usually) advises a trustee of the settlor’s wishes for the trust fund following the settlor’s death.

What is not clear is whether such letters are trust documents or not.  The significance of this being that if a letter of wishes is a trust document it can be disclosed to beneficiaries.  Further, if the letter forms part of the trust documents, is it binding on trustees?

Memordanda of wishes are not addressed in the Trustee Act 1956.  However, the nature of these letters of wishes have been considered by courts in a number of jurisdictions.  From these decisions it is clear that judicial authority is that while a trustee should consider a letter of wishes, the trustee is not bound by the letter.  While these decisions have been criticised by some commentators for reasons such as – how can beneficiaries hold a trustee accountable if the beneficiaries do not have all the information made available to the trustees?  However, the corrollary position is that there may well be information about individual beneficiaries conveyed that might be damaging if released to all the beneficiaries.  For example, if a settlor advises the trustees that a certain beneficiary has addiction issues or of the existence of “secret” issue.

When a trustee retires, absent any clear direction to the contrary, any letters of wishes should be forwarded to the new trustee, as the letter is to the trustees generally (rather than personally).

Where in doubt as to whether a letter of wishes should be distributed to beneficiaries, a trustee can seek guidance from the High Court.

References:

  • Re Rabaiotti’s 1989 Settlement [2000] WTLR 953
  • Re Londondeerry’s Settlement [1965] 2 WLR 229
  • Trustee Act 1956

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