Rethinking settlor wishes

It’s time to change our thinking on trust creator wishes.

While not binding, a well-crafted letter of wishes captures valuable guidance and insight into the trust creator’s purposes, intentions and hopes for a trust and its beneficiaries. That’s what American author James E Hughes Jr refers to as capturing the “spirit of the gift”. 

In the book “The Cycle of the Gift”, Hughes and his fellow authors encourage giving well and receiving well.  That’s something we need to think about when we’re working with trust creators and the beneficiaries of their trusts.

Hughes view is that if the spirit of a gift is understood by intended recipients, it is more likely to enhance their lives.  Conversely, continued long enough, gifts without spirit can end up becoming subsidies which can in turn reinforce an attitude of entitlement. 

A letter of wishes provides a wonderful opportunity for advisers to work with trust creators to record the spirit behind their gifts for both trustees and beneficiaries.

Unfortunately, too many trust creators don’t record wishes.  For those who do, it’s not unusual to see wishes recorded as brief generic statements providing little practical guidance for trustees (or beneficiaries). 

If that happens, an opportunity to influence beneficiaries is lost.

Part of the problem can be that trust creator wishes are prepared as part of a suite of technical documents when a trust is established. Expressing, capturing and recording wishes from the heart can be a challenge not only for trust creators, but also for their busy advisers.

A good set of trust creator wishes can be a guiding light for trustees and beneficiaries. 

For trustees, they are a reference point for decision making, especially when a trust creator cannot be consulted.  For example, what might a trustee need to know about the trust creator’s wishes for managing a challenging beneficiary (e.g. where there are mental health or addiction issues)

For beneficiaries, if the spirit behind a trust creator’s gift is captured, it will be better received and likely become a much more purposeful legacy.  Capturing and reflecting the trust creator’s voice within the letter of wishes has the potential to positively influence a beneficiary.     

John A Warnick of the Purposeful Planning Institute in Denver is an advocate for two sets of wishes – one for guiding trustees on the management of a trust and, one for guiding beneficiaries on the spirit behind their gift.  I reckon he’s right.

For anyone wanting to influence the expectations of parties in a trust relationship, a good place to start is to have a purposeful conversation with the trust creator/s about their wishes. 

Don’t leave it too late.  Plan with purpose!

Lindsay