Will or Letter of Wishes?

Will or Letter of Wishes?

What needs to go into a will and what can go into a letter of wishes?

When you make your will, you may wonder whether or not you also need to write a letter of wishes.  The key distinction is that your will is a legally binding document.  While a letter of wishes is not legally binding, it can offer flexibility and guidance to executors and trustees which can be very useful to them when managing your estate or a trust set up in your will.

‘Unlike a will, a letter of wishes does not have the same formalities and legal requirements. You can use this to express preferences, provide additional instructions, or explain the reasoning behind certain decisions made in the will,’ says Leila Murray, head of the Wills and Probate team at Kersey Solicitors.  ‘Obtaining legal advice is crucial to ensuring you place the relevant provisions into the appropriate document.’

Leila highlights some of the key issues when considering which provisions need to go into a will and which are more suitable for inclusion in a letter of wishes.

Key provisions to appear in your will

Key provisions that should appear in a will include:

• the appointment of executors;
• the appointment of guardians for any children;
• the distribution of assets – the way in which you choose to allocate any part or the whole of your estate should be clearly outlined in the terms of your will. This might include specific monetary gifts, the allocation of assets, or how you wish for the residual estate to be divided (i.e. what remains after specific gifts have been distributed and all debts and expenses have been paid). Including clear instructions on specific assets provides clarity to the executors for the management of the estate. This is particularly crucial in circumstances where there are complex matters such as a blended family, large portfolios of property and investments, or where you wish to do something that may be quite technical (such as distributing business or intellectual property assets) or controversial (such as gifting your estate to charity).
• any specific bequests or conditions attached to gifts, for example, if a beneficiary needs to reach a certain age to receive their gift or inheritance. An age-contingent trust provides a mechanism to ensure that assets intended for minors are managed responsibly until the specified age is reached; and
• whether you want to be buried or cremated, by placing instructions in the will, you can ensure that your final wishes are respected.

If you want the provisions to be legally binding, they must be included directly within the terms of your will.  For example, if you wish to leave your house to a specific person, this is generally not a gift which is suitable for a letter of wishes.

The fact that the provisions are legally binding means they can be enforced against your executor or trustee if not performed or if performed incorrectly.

Examples of provisions to include in a letter of wishes

It is important to remember that a letter of wishes is not a legally binding document. While it can provide valuable guidance to your executors and trustees, it will not be enforceable in the same way as a will.  Executors and trustees are not legally obliged to follow the instructions contained in a letter of wishes, although they ought to take them into consideration when making decisions regarding the estate or trust.

Common examples of provisions which appear in letters of wishes, and the benefits of including them in such documents, are as follows:

Setting out explanations

A letter of wishes can be used to set out your reasoning behind the decisions in your will.  This may be, for example, because you have left unequal shares to your children and you would like to clarify the rationale behind this division.  Whilst a letter of wishes is usually confidential, the trustees can still use the information in the document to provide evidence as to your views in the case of a dispute among beneficiaries.

Funeral arrangements

You can use a letter of wishes to articulate your preferred funeral arrangements, with specific instructions for the funeral service itself such as the selection of hymns and arrangements for the wake.

Charitable gifts

If a will trust is used to implement a charitable gift, a letter can provide guidance on the extent to which charities should benefit. It can take into account the lower rate of inheritance tax (IHT) of 36% for testators leaving at least 10% of their estates to charity, as the lower rate may be obtained by retrospective IHT treatment of trust distributions within two years after the testator’s death.

Children

If you are appointing guardians in your will, a letter of wishes can specify how you would like your children to be brought up, addressing issues such as where the children should be raised, what school you would like them to attend and so on.

Dealing with inexpensive chattels

When it comes to the distribution of inexpensive but sometimes sentimentally valuable chattels, a letter of wishes can provide a flexible way of issuing instructions to executors and trustees.  Often a will may refer to a letter or memorandum of wishes to be held alongside the will, which can deal with chattels.  This approach enables personal instructions for allocating items without cluttering the will with provisions concerning items of minimal commercial value. Additionally, if your wishes were to change, the letter could be altered without updating your will.

Digital assets

Digital assets, such as online accounts, digital currencies, social media profiles, and intellectual property stored online, often require specific handling that may not be easily addressed in the formal structure of a will.  A letter of wishes allows you to provide detailed guidance on accessing, managing, and transferring these assets. This document can be updated easily as digital assets and preferences change, ensuring that executors or digital trustees have clear and up-to-date instructions.

Pets

By using a letter of wishes for pet care instructions, you can name your preferred people to look after your pet and allocate funds for the pet’s maintenance outside the formalities of a will.

Use of a trust in your will

If your will establishes a trust, the letter of wishes can offer guidance to the trustees on how the trust should be administered on a range of issues.

Trustees of a discretionary trust have considerable freedom in exercising their powers in favour of beneficiaries, but you can offer them guidance in a letter of wishes setting out your personal views, principles, and priorities.

For example, you can set out who should benefit, when and to what extent.  This may include who is to be considered as the primary beneficiary, whether children should be treated equally, and to what extent tax should be considered in the decision making of the trustees.

As the letter, generally speaking, is confidential to the trustees, it can express sensitive information about beneficiaries, such as concerns about a beneficiary’s risk of divorce, gambling issues or alcoholism, which may be the rationale for protecting the assets through a trust structure.

For people who value their privacy, a will trust with a confidential letter of wishes ‘behind the scenes’ helps ensure the provisions of their will do not become public.

Reviewing and updating documents

A letter of wishes is usually signed at the same time as the will, but you can amend or rewrite it any time to take into account any changes of circumstances.

Both your will and letter of wishes should be reviewed periodically to ensure they reflect any changes in your circumstances or preferences.  Life events such as marriage, divorce, birth of children, or significant changes in financial circumstances may necessitate updates to these documents.

Using a letter of wishes offers the freedom to update or amend these instructions as needed without the formalities required for modifying the will, to cater for changing circumstances or preferences.

How we can help

It is very important to engage the expertise of a solicitor to ensure that all legal requirements are met and your wishes are clearly stated and where appropriate, legally binding.  This includes the drafting of a comprehensive and expertly written will in conjunction with a bespoke letter of wishes that can offer personal guidance from you to executors and trustees to help them fulfil their role appropriately.

For further information, please contact please contact a member of our Private Client team at Kerseys Solicitors in Ipswich on 01473 213311, Kerseys Solicitors in Colchester on 01206 584584 or Kerseys Solicitors in Felixstowe on 01394 834557 or email us at [email protected].  Alternatively visit our website and click “Call Me Back” and a member of our Private Client team will be happy to contact you at a time that is more convenient to you.