Tuesday, October 20, 2015

Memos of directions in relation to trusts

As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses the issue of memos of directions, or letters of wishes in relation to trusts at the following link - https://youtu.be/B9NuAE3lIiM

As usual, a transcript of the presentation for those that cannot (or choose not) to view the presentation is below –

Memos of directions, or letters of wishes, are a classic example of the 'continuum's' that the court has to work in and the overall framework of appropriate public policy.

With letters of wishes, what the courts are generally trying to balance on the one hand, is the idea that they should be there to support the trustees and help them reach the right decision, against the argument that trustees are ultimately responsible to answer to the court and not be subject to anyone else's direction.

Many cases in this area have had factual scenarios where the letters of wishes are referred to in the reasons for a decision by the trustee and the beneficiaries have challenged the decision and directions were sought from the court.

Often, the court will release the letter of wishes and make it known to the beneficiaries. However, the decisions observe that the only reason that the letter of wishes even comes into play is because the trustee chooses to disclose the existence of them.

Therefore, from a planning perspective, it may be a conservative and pragmatic approach that letters of wishes, even if they exist, are not actually disclosed anywhere by the trustee.