The Importance of Regularly Reviewing your Legal Wishes
If you had three wishes for 2021, might they be bringing an end to COVID 19, a long-awaited return to normality, and for a healthy and prosperous year ahead for you and your family?
While we cannot grant these for you, it is worth sparing a thought for some estate planning wishes which could be overdue for review, and on which we would be pleased to assist and advise.
Unlike a deed, a letter of wishes should not be legally binding, but it will be influential and persuasive. It should be read and stored alongside the deed it is intended to supplement and support. It seeks to provide important context and a personal touch to legal provisions. The contents of these letters are private and confidential among you, the recipient, and your legal advisers.
Here are two areas where it is desirable, in some cases essential, to set out your wishes in writing in support of your estate plans:
Guiding your Trustees
Whether established during your lifetime or built into your Will to be created on death, it is common for a Family Trust to include discretionary provisions; that is, where there is a range of potential beneficiaries (named or within a class) and where Trustees determine who is to benefit, when, and to what extent. This approach is designed to enable Trustees to make the most appropriate decisions for the beneficiaries, at the right time.
Family Trust terms may be self-explanatory, such as being equally for your children with income and capital paid out to them at set ages being reached. Alternatively, a much longer-term Trust might be anticipated. In either case, communicating the aims for the management of Trust Fund assets and their eventual distribution can aid the Trustees. A letter of wishes serves this purpose and forms a record of your current views and intentions. While there should be no attempt to constrain the discretion which has been given to Trustees by deed, the wishes can assist and support their future decision making.
Examples of guidance includes:
- ensuring large sums of inheritance are only made over at a time when children are showing sufficient maturity to handle it, empowering Trustees to act in the beneficiaries’ best interests regardless of age;
- to give future generations enough inheritance to do something but not enough to do nothing;
- to pay particular attention to certain individual circumstances or tax management strategies.
The focus of these wishes is often to provide a set of guiding principles or themes relevant to the family which are linked with the passage of wealth, and balanced with the appropriate level of asset protection, supervision or control.
Assisting your Attorneys
Granting Powers of Attorney entrusts others with powers to makes decisions in your best interests about your health, welfare, and finances at a time when you are unable to make such decisions for yourself because illness, injury or old age has (temporarily or permanently) diminished your legal capacity.
A letter of wishes can be used to supplement a Power of Attorney in providing explanation to the attorneys, or to wider family, as to the rationale behind your appointments. Such a letter can carry weight in desensitising matters at a point of heightened family emotion, for instance explaining in an individual’s own words why one family member, say an adult child, has been selected into this role over another.
The letter might also be used to let an individual describe how they would want the powers to be exercised, to provide some insight and critical guidance. As an example, a Welfare Power of Attorney would be expected to contain powers adequate for an attorney to decide on the provision of care. A letter of wishes can be used to add expectations about such circumstances, for instance that wherever possible an individual would prefer being cared for at home, or that if placed into care then that they would wish to be near family.
Other legal areas where letters of wishes might be useful include:
- explaining or justifying your choice of beneficiaries, and why certain people might have been included in your Will, or perhaps excluded from it (as occurred in the controversial English case of Ilott v Mitson in 2015);
- advice for guardians or mentors in raising or supporting children or young adult beneficiaries;
- your funeral wishes prescribing how you would wish these arrangements to be handled;
- an expression of wishes (or nomination form) to your pension scheme administrator outlining who you would like to benefit and to what extent.
It is important to make your legal wishes known at the point of writing your Will, Power of Attorney, or Family Trust, but also to take the time to regularly review them to ensure that they keep pace with changes in personal, family, and financial circumstances or with developments in the law.
Even if no changes require being made, it can be a useful exercise to review, re-sign and date such letters to demonstrate recency and relevance.
So, whether you are in the habit of making wishes for the year ahead, be sure to make or review some for your and your family’s future.