Statement of wishes, Memorandum of wish, Letter of wishes – no matter the name given to it, it is vital any document prepared does not create uncertainty or conflict with provisions you have made in your formal estate planning documents.
More commonly a statement of wishes is prepared at the same time as the preparation of a person’s will. A statement of wishes can be a useful tool to help protect your family’s privacy or help avoid litigation. Unlike your will, the document does not have to be a public document.
Confusion can arise when the statement of wishes does not reflect the provisions made in a person’s will, it is made at a later date or made by a person with questionable testamentary capacity. When preparing a statement of wishes it is important the contents cannot be interpreted to be an informal testamentary document and result in unintended outcomes.
We encourage you to contact your solicitor if you intend to create this document to ensure it will have the effect you want it to have. Your solicitor will work through a number of matters that you might like to consider. Any statement of wishes you make should be reviewed regularly to ensure the content and your wishes remain accurate.
Five reasons people often prepare a statement of wishes include:
REASON 1 – you want to provide direction about how distributions from a testamentary discretionary trust established in your will are to be made.
Usually a testamentary discretionary trust (TDT) established in a will gives the trustee power to make distributions at his or her absolute discretion. There are also often a large number of possible beneficiaries including your surviving spouse, children, grandchildren, your own parents, brothers and sisters.
You may want to provide guidance to your trustee about who you want to benefit from the TDT, how that benefit might be used and in what proportions. For example:
- You may like to direct the trustee to make distributions to support your child’s education. This might include direction about sending them to a private school, assisting them with tertiary education, supporting them with extra-curricular activities such music or sporting programs.
- As your child grows older, and if funds permit, you might like to provide direction about distributions of the fund to be used to assist in purchasing cars or homes, providing business support or other career opportunities.
- Depending on your circumstances it may not be intended that the beneficiaries receive equal distributions from the trust. For example, one child may have greater needs or develops greater needs over time. Should the trustee make distributions in consideration of each child’s personal circumstances?
- If one of your own children passes away leaving children of their own (ie: your grandchildren) then do you want the benefits then to pass to your grandchildren and or their surviving parent?
REASON TWO – you want to provide direction about the ongoing management of a family related business, company or trust.
Many people have non estate assets held in companies or trusts established during their lifetime.
You may be operating a family business through such entities.
Your statement of wishes can provide direction about how you would like your business to be managed in the future. This might include direction to your new manager and detail how you want the profits from the business to be shared.
REASON THREE – you have personal items that you want to go to certain people.
To make a specific gift in your will it must be clearly identified and described. This may not be possible or make your will too complicated. Although not binding, you may be happy to provide direction about your personal items in your statement of wishes.
REASON FOUR – you want to provide direction to guardians about how you want them to care for your minor children.
You can include directions to the guardians of your minor children about any number of matters in your statement of wishes. This might include at what age you think it would be appropriate for your child to get a car, whether you want them to go to a certain school, what sport you would like them to play or where you hope they would go on a holiday.
REASON FIVE – you might want to explain why you have distributed your estate in a particular way.
You may like to explain to your family why you have distributed your estate in a particular way. This might be for private reasons that you do not want made public by including in your will.
For example you may not have made a direct provision for a child but have left funds to be managed in a trust because that child is not capable of managing the funds on their own because of a disability; they may be an alcoholic, drug user or gambler.
Or perhaps you want to provide detail about a particular relationship you have with someone. For example, you may be estranged from a child and include details about your relationship over a number of years.