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The Many and Varied Uses of Letters of Wishes in Your Estate Plan

Estate planning documents (such as a will, power of attorney for property, power of attorney for personal care, Henson-type trust and/or inter vivos trust) are the legal framework of an estate plan--the "apparatus"--which can seem to be a tricky network of legal rules, directions, and often unavoidably, a lot of legalese to navigate. Estate plans are sometimes short on information or guidance regarding the "soft issues": the relationships, context, goals, aspirations, vision, preferences, history, etc. that inform the overall structure.

This is where a letter of wishes can be a valuable addition to your estate plan. It can "flesh out" or even "humanize" the estate plan. It can help to ensure your intentions are properly overlaid on the legal framework and carried out. It can also provide operating instructions to those in charge of carrying out your plan--e.g., your appointed attorneys for property or personal care, executors, trustees, and guardians of minor children or dependants with special needs. 

Letters of wishes can function as these operating instructions. A letter of wishes is a formal document often drafted with the assistance of a lawyer. Where broad legal powers are granted to the trustee of a trust or under a power of attorney, a letter of wishes can provide guidelines to the trustee or attorney in exercising those powers. While a letter of wishes is typically not legally binding, it can be an effective method of communicating goals, values and other critical information. Also, in the case of trustees and attorneys (in their capacity as fiduciaries), they are required to take into account all relevant circumstances when making discretionary decisions, including letters of wishes.

There are many situations in which a letter of wishes can provide helpful guidance, including:

  • from a parent to a child's guardian(s) setting out the guiding values and principles for a child's care and upbringing;
  • to your executors and family members expressing your wishes regarding the distribution of specific personal belongings;
  • to provide comfort and guidance to executors or trustees in carrying out their duties; including with respect to the operation and handling of any businesses that may form part of your estate;
  • to provide your attorney for personal care with information regarding your views on certain medical treatments and preferences regarding other personal care matters beyond typical "end-of-life" matters such as accommodation, food, hygiene and accustomed lifestyle;
  • to give direction or guidance to your executors regarding choosing which charity or charities are to benefit from a gift under your will, and the parameters of such gift (including amount and any special purposes and/or terms);
  • to trustees of testamentary trusts for children or grandchildren regarding factors the trustees should take into account when exercising their discretion to distribute trust income and/or capital to the beneficiaries, including schooling, assistance with buying a first home, etc.;
  • where a Henson-type trust provides broad discretion with respect to payments for the benefit of a family member with special needs, a letter of wishes can provide the trustee with valuable information regarding a child's unique needs and care, and the parents' goals for such child;
  • to provide clarity and context to your executors, trustees and beneficiaries regarding what may at first glance appear to be an unequal distribution of your estate.

If there is concern that wishes expressed in a non-binding letter of wishes may not be considered or respected, you may wish to make them legally binding. This may mean including mandatory directions or instructions in the relevant estate planning document or a separate memorandum. Mandatory terms can however reduce the overall flexibility of the estate plan. As with all estate planning, proper advice should be sought regarding your goals and objectives and the best way to incorporate them into the framework of your unique estate plan.

- Jenny Hughes

Please watch for our next post which will consider the redefinition of "family".

The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.

 

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