Letter of Wishes for Trustees: A Practical Guide for Settlors and Beneficiaries

A discretionary trust gives trustees absolute power over how and when to distribute income and capital to beneficiaries. This flexibility is the point: it allows trustees to respond to beneficiaries' changing circumstances, protect assets from creditors or divorce, and manage tax efficiently across generations. But it also means that without guidance, trustees are making decisions in an information vacuum — particularly where the settlor has died or lost capacity.

A letter of wishes bridges this gap. It is a non-binding document written by the settlor, addressed to the trustees, setting out the settlor's intentions, priorities, and preferences for how the trust should be administered and how beneficiaries should be treated. Trustees are not legally obliged to follow it, but in practice a well-written letter of wishes substantially shapes how a discretionary trust operates.

What a letter of wishes is — and is not

A letter of wishes is:

• A personal statement of the settlor's intentions, values, and priorities
• A guide to the circumstances and needs of individual beneficiaries
• A source of context that trustees can refer to when exercising their discretion
• A confidential document, separate from the trust deed and not included in the will

A letter of wishes is not:

• A legally binding instruction (unlike a trust deed)
• Part of the will (and does not form part of the public probate record)
• A replacement for the trust deed — it operates alongside it, not instead of it
• Fixed — it should be updated regularly to remain relevant

Why it matters for discretionary trusts

In a discretionary trust, no beneficiary has an automatic right to income or capital. The trustees have full discretion — within the class of beneficiaries defined in the trust deed — over who receives what and when. Without a letter of wishes, the trustees are exercising this discretion based on their own judgement, the information they independently gather about beneficiaries, and their general understanding of the settlor's likely intentions.

With a well-prepared letter of wishes, the trustees have a detailed and authoritative source of information from the person who knows the beneficiaries and the family situation best: the settlor themselves.

Courts in England and Wales have confirmed the status of letters of wishes in several cases: they are relevant documents that the trustees are entitled to take into account, and a failure to consider a clearly expressed letter of wishes may be relevant to whether trustees have properly exercised their discretion. However, the courts have consistently affirmed that trustees are not bound to follow a letter of wishes — they must still exercise their own independent judgement.

What to include in a letter of wishes

A useful letter of wishes typically addresses the following:

Distribution priorities among beneficiaries: if there are multiple beneficiaries, the settlor can express who they consider to have priority and in what circumstances. For example, a settlor might express that a surviving spouse should have access to income for their lifetime as a first priority, with capital available to children only after the spouse's death or in cases of genuine financial need.

Beneficiary circumstances and character: information about each beneficiary's financial position, employment, lifestyle, vulnerabilities, and any concerns the settlor has about their financial management. A beneficiary who struggles with debt or addiction may need to receive capital in a different way (lump sums are inadvisable; drip-feeding a regular income may be more appropriate). A beneficiary with a disability may need special consideration for means-tested benefits eligibility.

Emergency provisions: what the settlor considers to constitute a genuine emergency (medical costs, unexpected unemployment, housing crisis) as distinct from a general wish for more money. Trustees should have clear guidance on the threshold for emergency distributions.

Investment philosophy: whether the settlor wants the trust fund invested conservatively or with a growth orientation, whether there are ethical or ESG considerations, and whether the investment approach should change as the trust's remaining life shortens.

Business interests: if the trust holds shares in a family business, guidance on whether those shares should be retained, and on what basis and timeline they might be sold.

Specific assets: whether particular assets should be retained for family use or emotional reasons (a holiday home, a valuable collection) rather than sold for maximum financial return.

Distribution mechanics: whether distributions should generally be in income or capital, and whether the trustees should seek to equalise the position between beneficiaries over time or treat each distribution decision independently.

Updating the letter of wishes

A letter of wishes should be treated as a living document. Events that should trigger a review include:

• Birth of a new beneficiary (grandchild, for example)
• Death of a beneficiary or a trustee
• Significant change in a beneficiary's financial or personal circumstances (marriage, divorce, business success or failure, health deterioration)
• Change in the settlor's own views or values
• Significant change in the trust's assets or investment strategy

As a general rule, the letter of wishes should be reviewed at least every three to five years regardless of whether a specific event has occurred. An outdated letter — referring to circumstances no longer relevant — is worse than no letter at all, as it may mislead trustees.

The original letter should be kept with the trust documents, in the physical possession of the trustees. A copy should be retained by the settlor's solicitors. Each revision should be clearly dated and signed; old versions should be retained to provide context for the evolution of the settlor's thinking, but clearly superseded.

Confidentiality

A key advantage of the letter of wishes over a will is confidentiality. A will becomes a public document once probate is obtained. A letter of wishes, being a private instruction to trustees rather than part of the formal estate, does not enter the public record. Settlors can therefore express candid views about beneficiaries — including concerns about financial competence or personal behaviour — without those views becoming publicly known.

For this reason, it is important not to include the letter of wishes as part of or attached to the will. The two documents should be entirely separate, and solicitors preparing a will should confirm this explicitly.

Interaction with the trust protector role

Some modern trust deeds — particularly offshore structures governed by Jersey, Cayman, or Guernsey law — appoint a trust protector: an individual (often a trusted adviser or family member who is not a trustee) with specific powers to oversee the trustees, change the governing law, remove and appoint trustees, or even modify the trust's terms.

Where a trust protector exists, the letter of wishes may address the protector as well as the trustees, providing guidance on how the protector should exercise their powers. This is particularly important if the protector role is intended to pass to a next-generation family member who was not personally known to the original settlor.

Practical note on legal status

Because a letter of wishes is not legally binding, it cannot make a trustee legally liable for following it in the same way that a breach of trust would arise from departing from the trust deed. However, trustees should always consider whether a proposed course of action is consistent with, or a significant departure from, the settlor's expressed intentions — and document their reasoning when they do choose to act differently. This is both good practice and protection in any future dispute.

Compliance note

Trust law differs between jurisdictions. The principles in this guide apply to trusts governed by English law; trusts established under Scots law, Jersey law, Cayman law, or the law of other jurisdictions may be subject to different rules regarding the status of letters of wishes and trustee obligations. Always seek qualified legal advice in the relevant jurisdiction.

How Global Investments Can Help

Global Investments works with settlors, trustees, and beneficiaries of discretionary trusts to ensure that trust structures function as intended and are supported by clear, current documentation. We advise on the drafting and updating of letters of wishes, assist trustees in understanding and applying them, and coordinate with trust lawyers across the jurisdictions in which our clients' trusts are established. Contact our private client team to discuss your trust planning requirements.