- A letter of wishes is written by the settlor, and sometimes updated by them over time, addressed to the trustee.
- A discretionary trust — including a fully discretionary trust commonly used to benefit a person who receives means-tested government disability benefits — deliberately gives the trustee,…
If you have set up — or been named as trustee of — a discretionary trust in Ontario, you have probably come across the term letter of wishes. It sounds like it should be part of the trust itself, but it is not, and understanding that distinction matters for how much weight it actually carries.
A letter of wishes is a private, non-binding document that sits alongside a trust and gives the trustee guidance on how the settlor hoped their discretion would be exercised. It is common with discretionary family trusts and trusts set up for a beneficiary who receives means-tested disability benefits, where the whole point of the structure is that no beneficiary has an automatic right to a fixed payment.
This article explains what a letter of wishes can and cannot do, and what tends to make one genuinely useful years after it is written.
What a Letter of Wishes Actually Is
A letter of wishes is written by the settlor, and sometimes updated by them over time, addressed to the trustee. It typically explains why the trust was set up, what the settlor hoped it would achieve for each beneficiary, and how the settlor would like the trustee to approach decisions the trust document leaves to the trustee's discretion — for example, how to prioritize between beneficiaries, or what kinds of expenses the settlor considered appropriate to pay from the trust.
Unlike the trust document, a letter of wishes is not signed with any particular legal formality, does not need witnesses, and is not filed anywhere or made part of the trust's legal terms. It is guidance, not law.
Binding Trust Document vs. Non-Binding Letter of Wishes
| Trust document | Letter of wishes | |
|---|---|---|
| Legally binding on the trustee? | Yes | No |
| Can be enforced by a beneficiary in court? | Yes, generally | No, generally |
| Sets out the trustee's actual legal powers | Yes | No — it only explains how to use powers the trust document already grants |
| Can be updated informally as circumstances change | Generally requires a formal amendment or a new document | Can often be updated more informally, though it should still be dated and kept with the trust records |
| What happens if it conflicts with the trust document | The trust document governs | The trustee should follow the trust document; the letter cannot override it |
Why Discretionary Trusts Rely on Them So Heavily
A discretionary trust — including a fully discretionary trust commonly used to benefit a person who receives means-tested government disability benefits — deliberately gives the trustee, not the beneficiary, the power to decide how and when trust funds are used. That structure is often exactly what protects the beneficiary's eligibility for those benefits, because no fixed entitlement exists for anyone to point to.
The trade-off is that the trustee is left with real judgment calls, sometimes years after the settlor is no longer available to explain what they intended. A thoughtful letter of wishes fills that gap — not by binding the trustee, but by giving them something concrete to weigh against the circumstances actually in front of them.
What a Good Letter of Wishes Usually Covers
- The settlor's overall goals for the trust and for each beneficiary.
- How the settlor would like the trustee to think about competing requests between beneficiaries, if there is more than one.
- Examples of expenses the settlor considered appropriate, or inappropriate, to pay from the trust.
- Guidance on how actively the settlor expected the trustee to communicate with beneficiaries or their families.
- Any thoughts on when, if ever, the settlor hoped the trust might eventually be wound up.
A letter of wishes works best when it explains reasoning, not just conclusions. A trustee facing a genuinely new situation years later is better served by understanding why the settlor felt a certain way than by a rigid instruction that may not fit the facts that actually arise.
Keeping a Letter of Wishes Useful Over Time
Because it is not part of the formal trust, a letter of wishes can be revisited and updated as family circumstances change — a new grandchild, a beneficiary's changing needs, or a shift in the settlor's own thinking. It should be dated each time it is revised, kept with the trust's other records so the trustee can actually find it, and shared with the trustee directly rather than left somewhere it might never be located.
Frequently asked questions
Can a beneficiary force a trustee to follow a letter of wishes?
No. Because the letter is not legally binding, a beneficiary generally cannot go to court to force a trustee to follow it. A trustee who ignores a letter of wishes entirely, without good reason, may face harder questions about whether they properly exercised their discretion — but the letter itself does not create an enforceable right.
Should a letter of wishes be attached to the trust document?
Usually not as a physical attachment, since that can blur the line between the two and create arguments about whether parts of it were meant to be binding. It is generally better kept as a clearly separate, dated document that the trustee knows about and can access.
Does every trust need a letter of wishes?
No. A trust with narrow, clearly defined terms and little left to the trustee's discretion may not need one. They become more valuable as a trust gives the trustee broader discretion, and especially where a settlor wants to explain reasoning that would be awkward or overly rigid to write directly into the legal document.
Who should help draft a letter of wishes?
While it does not require the same legal formalities as a will or trust document, it is worth having a lawyer review it alongside the trust itself, so the two documents work together rather than creating confusion about what is actually binding.
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