How a Letter of Wishes Can Shape Trust Administration

A letter of wishes is one of the main supporting documents for trust planning today, as it helps inform trustees on how to administer a trust in accordance with a settlor’s wishes after the trust has been established.

Although letters of wishes are usually non-binding under the law, trustees may still refer to them when making discretionary decisions regarding distributions to beneficiaries, family relationships, educational costs, the succession of businesses, or the maintenance of a family’s wealth over time.

A well-drafted letter of wishes in a discretionary trust or a multi-generational wealth structure can greatly affect how a trustee administers the trust, depending on the context of the letter of wishes, but not the trust deed.

The purpose of this guide is to explain what a letter of wishes is, if a letter of wishes is legally binding, how trustees apply letters of wishes in practice, and why letters of wishes remain an essential estate planning tool in 2026.

Key Takeaways

• Letters of wishes are non-binding; however, for trustees, they indicate what the settlor hoped for and intended regarding the trust and its administration.
• Letters of wishes cannot supersede the terms of the trust deed; however, in most cases, trustees will consider their contents when making discretionary decisions.
• In many cases, individuals write letters of wishes to describe how they would prefer that assets be allocated at their death, to provide background information on family relationships, and/or to articulate long-term strategies for preserving wealth.
• Although letters of wishes may guide trustees in their decisions, they are obligated to act within their fiduciary duties and to comply with the laws governing trusts.
• Since updating a letter of wishes is generally less difficult than amending a trust deed, letters of wishes allow the settlor’s objectives to evolve with changing circumstances.

What Is a Letter of Wishes in Trust Planning?

A letter of wishes is a personal note from the settlor of a trust to his/her trustees as to how he/she would like them to manage the trust. A letter of wishes can be viewed separately from the trust deed (the formal legal documents that establish and govern a trust’s management) and is often used to assist trustees in making decisions in accordance with the settlor’s original intent.

Trust deeds are typically limited to establishing the existence of a trust, defining the terms under which it will operate, and governing the distribution of its assets. A letter of wishes allows the settlor to provide additional information and guidance on specific aspects of the trust administration.

Letters of wishes can cover topics such as:

• The personal values and preferences of the settlor
• The importance of providing financial assistance to beneficiaries based on family considerations or specific needs
• Long-term plans for particular assets
• Concerns about how beneficiaries may use wealth

A typical example of this type of provision could include the statement “I wish my grandchildren to have priority access to funding for their educational costs,” or alternatively, “I prefer that distributions from the trust are made available to support entrepreneurial ventures, rather than being provided on an unrestricted basis.”

A letter of wishes need not be formally binding and typically will not be signed. Letters of wishes should be distributed to those who have been appointed as trustees, as well as to other parties involved in the management of the trust (such as protectors or advisors).

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Why Settlors Write a Letter of Wishes

As trusts have long lifespans (sometimes spanning multiple generations), the trustee(s) may encounter situations in which the settlor’s original intent is no longer reflected in the trust instrument’s terms. 

A letter of wishes (a non-binding, separate document from the trust instrument) provides an opportunity for the settlor to explain their rationale, motivation, and priorities related to the trust. This may not be readily apparent from reading the legal documents alone. This is particularly important for discretionary decisions made by trustees.

Typical reasons to create a letter of wishes:

1. To clarify the intentions behind the trust: While the trust instrument outlines the authorities and guidelines the trustee must follow, it typically does not explain why a specific authority was granted. A letter of wishes clarifies the trust’s overall objective and the underlying rationale for the specific language used.
2. Provide guidance on future distributions: Many settlors wish to instruct the trustee on criteria they would like the trustee to consider when making distribution decisions (such as education, medical needs, or support for entrepreneurial activities).
3. Describe family dynamics: Families are comprised of many variables, including personalities, interests, and history. A letter of wishes describes how various family members should be treated under different circumstances.
4. Support preservation of family values/legacy: Sometimes a letter of wishes includes information about objectives such as supporting charities or preserving family businesses.

Is a Letter of Wishes Legally Binding?

Typically, a letter of wishes is not considered legally enforceable (i.e., a trustee has no legal obligation to adhere to its contents). A trustee would, however, use a letter of wishes for guidance purposes when he/she uses his/her discretion as a trustee.

In virtually all jurisdictions, trustees are bound by their fiduciary duties. As part of this duty, a trustee will need to act in the best interest of the beneficiary and/or manage trust property prudently. The fiduciary responsibilities of a trustee can be found in publicly available resources, including those of the Internal Revenue Service and the UK government.

As a result, while a trustee cannot comply with an instruction contrary to the provisions of the trust deed and/or the applicable law, a letter of wishes can still have a substantial practical impact upon the decisions made by the trustee, provided the trust deed allows the trustee(s) some degree of discretion.

Although letters of wishes are usually unenforceable, trustees have a number of obligations as fiduciaries under the relevant trust laws.

For example, the UK government explains trustee duties and responsibilities through official guidance published by GOV.UK, while the Internal Revenue Service (IRS) provides guidance regarding trust administration and fiduciary obligations in the United States.

How Trustees Use Letters of Wishes in Practice

The Letter of Wishes is not legally binding, but it does provide an important resource for the trustee in carrying out the terms of the trust deed. The trustee may refer to the letter of wishes when exercising the discretionary power granted under the terms of the trust deed.

There are several common scenarios in which the trustee finds the letter of wishes useful.

Distribution Decisions

In some trusts, the trustee has discretion to determine when and how distributions will be made to the beneficiaries. The trustee may find a letter of wishes very informative in this regard; however, it cannot impose obligations on the trustee. If a settlor expresses his/her wishes regarding distributions (e.g., support for a beneficiary’s post-secondary education, assistance with a first-time home purchase, payment of health-related/medical costs, or encouragement of a responsible business/entrepreneurial venture), the trustee would likely consider them when making its decision.

Managing Family Circumstances

Family situations are rarely straightforward. A letter of wishes may explain issues that trustees should consider, such as:

• Unequal financial needs among beneficiaries
• Concerns about financial responsibility
• Support for a beneficiary with special needs
• Expectations around family harmony

This context can help trustees make decisions that align with the settlor’s broader goals.

Practical Example

In a blended family situation, in which an individual (settlor) has created a discretionary trust for a new spouse, children from a former relationship, and future grandchildren; and if the discretionary trust deed gives the trustees wide powers to distribute funds as they see fit and does not clearly set out the settlor’s motivations behind setting up the discretionary trust or the settlor’s own family concerns.

Then a comprehensive letter of wishes can be drafted by the trustee(s), which explains that the settlor would like the surviving spouse to have sufficient financial resources available throughout his/her lifetime and also preserve some of the assets within the discretionary trust for the benefit of the settlor’s children who are beneficiaries from his/her former relationship.

If there is no further information, the trustees will likely have difficulty balancing the competing interests of different beneficiaries, thereby increasing the risk of conflict amongst the beneficiaries and/or litigation.

Long-Term Asset Management

Trusts often include long-term investments or other types of property or assets requiring a great deal of maintenance/management over an extended period of time (e.g., family-owned business interests, investment portfolios, commercial and/or residential real estate holdings, and charitable organizations). A letter of wishes can provide guidance to the trustee on how the settlor wishes these assets to be maintained/managed/preserved over time.

When a Letter of Wishes Has the Most Influence

The influence that a Letter of Wishes will have over the administration of a trust is dependent upon the nature of the trust and the powers afforded to trustees.

The most significant effect that letters of wishes may have is typically as follows:

Discretionary Trusts

Letters of wishes are likely to be very influential in discretionary trusts. This is because the terms of the deed of settlement give trustees discretion over when and how they distribute monies to beneficiaries, and letters of wishes are likely to assist them in making these decisions.

Multi-Generational Trusts

Letters of wishes may also be highly influential where a trust has been established to endure for many years (i.e., multi-generationally), and it is unlikely that the original settlor will be alive to clarify their intentions to future trustees. In this way, letters of wishes can provide an invaluable source of information to the future trustees.

Complex Family Structures

Where there are a number of beneficiaries from previous marriages or blended families, etc., letters of wishes may assist in explaining how the original settlor envisaged the trust benefiting different parties within their family.

Long-Term Wealth Planning

Finally, letters of wishes may influence long-term wealth preservation trusts. For example, letters of wishes may include principles such as “responsible stewardship” or “gradual distribution” when distributing trust funds.

Letter of Wishes vs Trust Deed

Although both documents relate to the trust, they serve very different purposes.

Remember this one key point: the trust deed defines the legal basis for the trust; the letter of wishes provides an understanding (and interpretation) of what is important to you, the settlor, as it relates to your intent with respect to how you would like the trustee(s) to exercise their discretionary powers.

Can Courts Consider a Letter of Wishes?

Letters of wishes are generally not binding on a trustee from a legal perspective. However, courts have the authority to review whether the trustee properly took into account the settlor’s wishes in the letter of wishes before making discretionary decisions that affect the terms of the trust. As such, if there is sufficient evidence that the trustee gave no consideration to the settlor’s wishes when making discretionary decisions related to the trust, courts may find that the trustee failed to act according to the settlor’s desires.

Example of a Letter of Wishes in Practice

A person establishes a discretionary family trust and has at least three (or more) children and/or grandchildren named as potential beneficiaries. The discretionary aspect of this type of trust stems largely from the trustees’ ability to decide when and whether to distribute income and/or capital to the beneficiaries; however, the settlor may guide the trustees’ decision-making by providing a letter of wishes. 

For example, the letter of wishes may outline the order of priority for each beneficiary’s expectations regarding how they could utilize the monies made available to them.

Specifically:

• The letter of wishes may advise the trustee to pay all educational costs for any grandchild before distributing to other beneficiaries;
• The letter of wishes may inform the Trustee that it would be appropriate to help support a beneficiary who wants to start a business if the beneficiary develops a valid business plan;
• The letter of wishes may discourage the trustee from making large distributions to minors so that they have an opportunity to develop responsibility in handling money;
• Lastly, the letter of wishes may direct the Trustee to maintain a family vacation home intact and prevent its sale since the trust desires to keep it preserved for future generations.

Advantages of Using a Letter of Wishes

An informal will is a versatile way to add detail to a trust arrangement.

While the formal legal documents of a trust do not have enough room to fully describe the reasons or motivations of the grantor, the casual will could be used as a source of:

• Trustees’ clarification: A will provides the trustee(s) with insight into why the grantor made decisions (i.e., prioritized) and how they should use their discretion.
• The flexibility of time: Since this document is usually separate from the trust agreement, the casual will can be modified at some future date if needed due to changing circumstances or the grantor’s wishes; no additional formal legal activity would be required.
• Disputes among family members are reduced: By providing clear direction for the beneficiaries on the trust’s intended purpose or main focus, there is much less chance of misunderstandings and/or disagreements among the beneficiaries.
• Support for long-term planning: The grantor may want to outline his/her long-term objectives for the distribution of their estate and/or their assets, such as preserving wealth, supporting education, etc., in the casual will.
• Adding a ‘human factor’: Formal documentation usually includes only technical/legally correct terminology. Therefore, it allows for the expression of personal values/rationalization/, and background information in everyday English so that all stakeholders, including trustees and other interested parties, can clearly understand.

Potential Risks and Limitations

The limitations of letters of wishes include the risk of differing interpretations. Trustees will not be bound to follow the instructions in letters of wishes since these cannot be used as a basis for enforcing legal rights. Therefore, depending on how the instructions in the letters are interpreted by each individual trustee, each may interpret those same letters differently.

A further limitation of letters of wishes arises when they become outdated. If the settlor’s circumstances have changed with regard to his or her family (i.e., he or she now has children or grandchildren) and if this change has occurred after the date upon which the letter was created, then the trustee may choose to act pursuant to the provisions of the letter rather than being guided by the settlor’s most recent intentions.

In addition, the beneficiaries may misunderstand the intent behind letters of wishes. A beneficiary may consider a letter of wishes to be a legally binding contract, whereas a letter of wishes is simply advisory to a trustee.

Too much information in letters of wishes may actually reduce the amount of authority that the trustee has to exercise independent judgment.

Best Practices for Writing a Letter of Wishes

Writing a letter of wishes can provide guidance on the disposition of your assets in accordance with your wishes. When properly drafted, letters of intent should allow those responsible for managing your affairs to act independently.

There are several general guidelines you can use while drafting a letter of intention: 

1. Keep your letter of intent simple and clear. Do not create too many “if’s”, as these can limit the ability of those who are expected to follow your wishes.
2. Include reasons behind the specific choices you have made: Providing background may help explain the reasoning behind your decisions.
3. Allow flexibility: You don’t need to include all details. Leave them options based upon what you feel is the appropriate course of action at the time of distribution.
4. Review and revise your letter of intent: At least once each year, review your letter to ensure that nothing has occurred that would require an adjustment in your wishes. Are the provisions in your letter still relevant? Have there been any changes within your family that could impact the manner in which you wish to distribute your estate?
5. Seek advice from qualified professionals: To protect yourself and avoid any potential conflicts with your existing trust documents, consider consulting with a legal and/or financial advisor.

When Should a Letter of Wishes Be Updated?

A letter of wishes should be reviewed after all of the significant events in a person’s life. These could include the birth of a new child or grandchild, a change in a family relationship, or a large change in financial or asset status. Any time a person makes a significant change to their charitable goals or long-term plans, the letter of wishes should be reviewed. The goal of reviewing a letter of wishes is to help ensure that a trustee follows the settlor’s original intent as closely as possible during the administration of the trust. If a settlor updates his/her letter of wishes regularly, he/she can provide an additional source of information for the trustee to use in making informed decisions. This can clarify what the settlor wants regarding distributions from the trust, what is most important to him/her regarding his/her family, and how he/she wants his/her assets managed over the long term.

Summary

A letter of wishes can affect the administration of a trust (even though it is not legally binding) by providing a statement of intention from the settlor, which the trustee can consider when exercising their discretion to make distributions from the trust. A letter of wishes cannot usurp the express provisions of the trust deed or eliminate a trustee’s obligations; however, it can assist with decision-making regarding distributions, family priorities, and long-term management of assets. If a settlor drafts their letter of wishes with clarity and updates it regularly, it will become an excellent tool to support the formal trust structure.

Letters of wishes can be a helpful mechanism for families who use trusts as one of several tools for wealth planning over generations. Letters of wishes can help ensure that, while a trustee understands the legal aspects of the trust, they also understand the underlying philosophy and objectives the settlor intended through their use of trusts.

Frequently Asked Questions