A letter of wishes is a powerful, though non-binding, document that can provide invaluable guidance to the trustee of your testamentary trust, and it’s a fantastic question to ask when considering your estate plan. While a testamentary trust is established through a formal will and becomes effective upon your passing, a letter of wishes allows you to express your personal preferences and intentions in a more flexible and informal way. This can be particularly helpful for nuanced situations or when you want to convey information that doesn’t necessarily need to be legally binding. It’s a tool to speak directly to the trustee from beyond the grave, offering insights into your values and the spirit behind your estate planning decisions.
What are the benefits of a letter of wishes?
The benefits are numerous. A letter of wishes can clarify ambiguities in your trust document, explain the reasoning behind certain provisions, and offer guidance on discretionary distributions. For example, you might specify that you want funds used for your grandchildren’s education, but leave the trustee with discretion on *how* those funds are allocated – perhaps prioritizing those pursuing vocational training or trades. It’s estimated that approximately 30% of estate disputes stem from misunderstandings of the grantor’s intent; a clear letter of wishes can significantly reduce that risk. This isn’t about *controlling* from beyond the grave, but about *communicating* your wishes effectively. It is also a space to address things like family dynamics. Perhaps there’s a sibling you’d like the trustee to check in on more frequently, or a particular charitable cause close to your heart that you’d like them to consider. These are things that rarely make it into the formal legal language of a trust.
How does a letter of wishes differ from a will or trust?
It’s crucial to understand that a letter of wishes is *not* a legally binding document. Unlike your will or trust, it doesn’t have the force of law. A will or trust dictates *what* should happen with your assets; a letter of wishes explains *why* you made those decisions. Think of it as a supplemental guide, offering context and insight. For instance, you might have a provision in your trust requiring equal distributions to your children. Your letter of wishes could explain that, while you want equal financial treatment, you also understand one child may have greater needs due to health issues, and the trustee should consider that when making distributions. California law recognizes the importance of both formal legal documents and informal expressions of intent. While the trust dictates the *musts*, the letter of wishes outlines the *shoulds* and *coulds*. Remember that California is a community property state; all assets acquired during a marriage are owned 50/50. The “double step-up” in basis for the surviving spouse offers significant tax advantages that a letter of wishes could help clarify how to best utilize.
What should I include in my letter of wishes?
Consider including details about your values, your philanthropic interests, and your hopes for your beneficiaries. You can also address specific concerns or sensitivities within your family. Perhaps you want to ensure a certain family heirloom is passed down to a particular grandchild, or you want to encourage your children to prioritize experiences over material possessions. I remember a client, Evelyn, who wanted to ensure her grandson, a talented musician, had the resources to pursue his passion. She included a detailed letter of wishes outlining her desire for a trust fund specifically earmarked for music lessons, instruments, and potentially, college tuition for a music program. This wasn’t a strict requirement in the trust, but it provided clear guidance to the trustee. However, I also recall a situation with George, who didn’t write a letter of wishes. After his passing, his children argued for years over how to interpret a vague provision in his trust regarding charitable donations. A simple letter of wishes outlining his intentions could have prevented a lot of heartache and legal fees. Formal probate is required for estates over $184,500, and the statutory fees for executors and attorneys can be substantial – clear intentions reduce the likelihood of costly disputes.
What about validity and enforcement?
While not legally binding, a properly drafted letter of wishes can carry significant weight. The trustee is ethically obligated to consider your expressed wishes, and a well-reasoned and clearly articulated letter will be given due consideration. California recognizes both formal wills (signed and witnessed by two people simultaneously) and holographic wills (entirely handwritten by the testator, requiring no witnesses). However, a letter of wishes doesn’t fall under those strict requirements. It’s more about demonstrating your intent. The California Prudent Investor Act guides trustees in managing investments, but a letter of wishes can provide valuable insight into your risk tolerance and investment preferences. Remember, a no-contest clause in a trust or will is narrowly enforced and only applies if a beneficiary files a direct contest without “probable cause.” So, while a letter of wishes isn’t a binding contract, it can significantly influence the trustee’s decision-making process.
720 N Broadway #107, Escondido, CA 92025Contact Steven F. Bliss ESQ. today at (760) 884-4044 to discuss your estate planning needs. Don’t leave your wishes to chance; let us help you create a comprehensive plan that ensures your legacy is preserved and your loved ones are protected.
Don’t just plan *for* the future, plan *with* intention.