A letter of wishes is more than just a document; it’s a heartfelt message that accompanies your will or trust. Unlike the formal jargon of legal documents, a letter of wishes speaks in your voice, offering personal insights and directives to your loved ones about handling your estate.
Why consider a letter of wishes?
When planning your estate, drafting a letter of wishes can be a deeply personal first step before diving into the complexities with your professional advisers. It’s like having a conversation with your family from beyond, guiding them with your values and preferences. If you’re unsure where to start, feel free to reach out for a template; we’re here to help.
The Role of Modern Wills and Trusts
Today’s wills and trusts can be baffling, laden with legal terms that might as well be a foreign language. Increasingly nowadays, letters of wishes are drafted by professionals to ensure the clarity of the planning. They often deal with intricate rules, like those governing the Residence Nil Rate Band. In order to clearly explain your estate planning, you might combine professional advice with your desire to express your personal desires when writing your letter of wishes.
The Personal Touch of Letters of Wishes
Whether you draft it yourself or with professional help, your letter of wishes is your story, told your way. It’s less about legal formalities and more about clarity and emotion. For instance, I once helped a client express her wishes to include a very detailed plan for her funeral, from the hymns and music to the order of the ceremony. It took a considerable number of pages to reflect her requests—details too personal for a will but perfect for a letter of wishes.
What to Include in Your Letter of Wishes
1. Distribution of Personal Items: Who gets your grandfather’s watch or your collection of first editions? Specify these to avoid family disputes.
2. Guardianship of Minor Children: If you have kids, this is crucial. Discuss your wishes for their care and ensure financial provisions are in place for their guardians. After meeting some very wealthy clients who had very wealthy friends, they concluded that they wished to appoint guardianship to friends who “were poor as church mice” but loved their children like their own. I suggested that they arrange for a large lump sum payable to the guardians so that they could afford to buy a bigger house and fund the costs of bringing up their children. They made such an arrangement by taking out a life insurance policy.
3. Special Bequests or Charitable Donations: Share the stories behind your bequests or why you chose a particular charity. It adds meaning to your gifts. Take particular care to have the address of the charity and their charity reference number; you can obtain such details from the Charity Commission’s website.
4. Managing Financial Assets: Offer guidance on managing assets. if you’re concerned about a beneficiary’s financial wisdom, it is probably better to ensure monies go into a trust for them.
5. Funeral and Burial Instructions: This is your chance to outline your preferred arrangements. Maybe you want a simple ceremony under your favourite oak tree; these details matter.
6. Digital Assets: Don’t forget your online life. Provide instructions for your digital assets and accounts. One of our clients, who was an IT consultant, died because he had encrypted all his passwords. It took six months to establish what his assets were.
7. Pets: Your furry friends need a plan too. Specify who should care for them, and consider setting aside funds for their upkeep. If you decide that an animal charity should look after them, please consider making a large donation to the charity.
8. Personal Messages: Here’s where you can speak from the heart. Share your love and your hopes, and maybe explain some of the tougher decisions you’ve had to make.
When you undertake advanced estate planning, your planner will present you with a confusing array of documents. That is because the elevated drafting of your wills and associated discretionary trusts is made more complicated due to the array of options they include.
The inclusion of all the options will assist you in your estate planning in the years ahead.
In this advanced planning, the letter of wishes comes into its own. It underpins all of the planning and makes sense of the links between your other documentation.
If you have been following the TV series “Succession,” Letters of Wishes or Side Letters had a role to play in that series.
The revelation that Logan has written a cover letter in which he wishes for his estranged son Kendall to succeed him as CEO of the Roy family’s media conglomerate, WaystarRoyco, is one of the major narrative twists. As a result, Kendall and his brother Roman, who had not even been given much thought before, assume joint CEO duties.
In the real world, a limited company is a separate legal entity. What happens to company shares would normally be governed by a shareholder agreement or a business trust.
Instead of being the understudy, it becomes the core document and the one we always take care of to ensure clients read and understand thoroughly.
Despite a letter of wishes not being legally binding, it is “persuasive” and will be considered alongside your wills and trusts, a combination that is powerful for achieving clarity and peace of mind.
It’s your narrative, a way to ensure your voice is heard and your wishes respected. Think of it as a final, loving conversation with your family, guiding them when you’re no longer there.
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Ray Best
Like his academic development, writing came late to Ray. He has written several published works, “Inheritance Tax Planning – My Way” and “Shareholder Protection & Partnership Protection” and has had four feature articles published in Tax Adviser magazine, but the publication he is most noted for is the joint collaboration with Tony Granger “Inheritance Tax Simplified”.
