Head of M&P Legal Private Client team, Solicitor Patrick Swanney, explains how a simple letter can go a long way in estate planning.

While a will is the primary legal document governing the distribution of an individual’s Isle of Man estate on death, there are a number of additional documents that can assist executors, trustees, and beneficiaries in administering an estate effectively.

One of the most useful of these is a Letter of Wishes.

What Is a Letter of Wishes?

A Letter of Wishes is a document prepared alongside a will or trust arrangement.

Its purpose is to provide practical guidance to executors, trustees, or family members on how the individual would like certain matters to be dealt with.

Unlike a will, it does not dispose of assets but guides your Executors in their decision-making during administration.

Legal Status

The legal status of a Letter of Wishes is a key point of distinction.

A Letter of Wishes is generally informal in nature and does not usually have binding legal effect in the Isle of Man.

However, despite its non-binding nature, it can carry significant practical weight. It may provide valuable insight into the settlor’s intentions and can assist executors and trustees when exercising their discretions or addressing practical issues that arise during the administration of an estate.

Matters Commonly Addressed

A Letter of Wishes may be used to address a wide range of personal, practical and administrative matters, including:

• The rationale behind provisions contained within a will;
• Guidance concerning the distribution of personal effects and items of sentimental value;
• Funeral and burial preferences;
• The care and welfare of pets;
• Information relating to digital assets and online accounts;
• Guidance to trustees regarding the exercise of discretionary powers;
• Educational, financial or welfare considerations concerning minor beneficiaries; and
• Personal messages or explanations intended for family members.

Benefits of a Letter of Wishes

A Letter of Wishes offers a number of practical advantages as part of an overall estate planning structure:

• Flexibility:
  • It can be updated or replaced at any time without the need to execute a new will or amend a formal trust deed.
• Guidance for Executors and Trustees:
  • It provides helpful context and direction to assist those responsible for administering the estate.
• Clarity of Intentions:
  • It can set out the reasoning behind certain decisions, helping others better understand the testator’s wishes.
• Reduced Potential for Disputes:

Reducing the Risk of Disputes

One of the key benefits of a Letter of Wishes is its potential to reduce the likelihood of disputes arising during estate administration.

Although it cannot prevent challenges being brought, it can play an important supporting role in explaining the reasoning behind certain decisions.

Inheritance disputes, including will challenges and claims under family provision legislation, often stem from uncertainty or misunderstanding about a testator’s intentions. A Letter of Wishes can help address this by setting out the background to particular gifts or decisions in a clear and accessible way. Where beneficiaries are able to understand the context in which decisions were made, they may be less inclined to contest the arrangements.

In this way, a Letter of Wishes can complement the formal estate planning documents by providing practical insight that would not otherwise be recorded in binding legal instruments.

Storage and Review

A Letter of Wishes should be stored securely alongside the relevant will or trust documentation, with executors, trustees or professional advisers aware of its existence and location.

As with any estate planning document, regular review is essential. Significant life events, including marriage, divorce, the birth of children or grandchildren, changes in financial circumstances or alterations to testamentary arrangements, may necessitate revisions to ensure the document continues to reflect the individual's intentions.

Solicitor Patrick Swanney has 16 years’ experience of estate matters and is about to be admitted as an Advocate in the Isle of Man. This article is not legal advice, always take specific advice on the facts of each case.

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