Navigating the complexities of estate planning often leaves individuals pondering the best ways to convey their intentions beyond the strict legal framework of a will or trust. A testamentary trust, created within a will, is a powerful tool, but sometimes it needs a personal touch—and that’s where a letter of wishes comes in.
What Exactly *Is* a Letter of Wishes?
A letter of wishes is a non-binding document that accompanies your will or trust. It allows you to express your hopes and desires regarding the distribution of assets, care of beneficiaries, or any other matter relevant to your estate, without creating legally enforceable obligations. Think of it as a guiding message to your trustee or executor, offering insight into *why* you made certain decisions. It’s particularly valuable in situations involving complex family dynamics or unique circumstances. Many people assume a trust document fully captures their intentions, but it can often be too rigid and lack the nuance that a personal letter provides.
Why Would I Need a Letter of Wishes with a Testamentary Trust?
A testamentary trust is established *within* your will and comes into effect *after* your passing. Because it’s created by the will, it operates under the formal rules outlined in that document. However, a letter of wishes provides flexibility. For example, you might specify that you want funds from the trust used for a child’s education, but leave the *type* of education (private school vs. college) to the trustee’s discretion, guided by your expressed values in the letter. Approximately 60% of estate planning attorneys report seeing increased client satisfaction when letters of wishes are used, as they demonstrate a more personalized approach. This is especially crucial when dealing with beneficiaries who may have different needs or personalities.
What Should Be Included in My Letter of Wishes?
While not legally binding, your letter of wishes should be thoughtfully composed. Consider including:
- Specific explanations for your asset distribution choices.
- Guidance on how you envision the trust funds being used for beneficiaries’ benefit (education, healthcare, living expenses, etc.).
- Details about your values and priorities, helping the trustee make informed decisions in line with your wishes.
- Information about any unique family circumstances or relationships.
- Instructions regarding digital assets—access to online accounts, social media, and digital photos.
Remember, California law dictates that all assets acquired during a marriage are community property, owned 50/50, and the surviving spouse benefits from a “double step-up” in basis for tax purposes. Your letter of wishes can clarify how you’d like the trustee to navigate these situations within the trust.
A Story of Unclear Intentions
Old Man Hemlock, a local carpenter, meticulously crafted his will, leaving a significant sum in trust for his granddaughter, Lily. He simply stated the funds were to be used for her “well-being.” After his passing, a dispute arose between Lily’s parents. One parent wanted the money used for private music lessons, believing it would nurture Lily’s talent. The other preferred a practical approach – saving the funds for college. Without further guidance, the trustee was caught in the middle, and legal fees quickly escalated. The situation created tension within the family, overshadowing Hemlock’s intentions to provide a secure future for his granddaughter. It highlighted how even seemingly clear instructions can be open to interpretation.
How a Letter of Wishes Can Save the Day
Years later, Margaret, a retired teacher, learned from Hemlock’s mistake. As she prepared her estate plan, she worked with an estate planning attorney and created both a testamentary trust and a detailed letter of wishes. In it, she explicitly stated her desire for her grandchildren’s educational pursuits, highlighting her belief in the importance of both arts *and* sciences. She also expressed her preference for funding experiences – travel, museum visits, summer camps – that would broaden their horizons. When Margaret passed away, her trustee was able to administer the trust smoothly, guided by her heartfelt wishes. The family remained united, knowing her legacy was being honored exactly as she intended.
Formal probate is only required for estates over $184,500, and statutory fees for executors and attorneys can be substantial, making probate avoidance a key goal for many. A well-crafted trust, along with a letter of wishes, can help achieve this.
If you’re considering a testamentary trust, remember that California allows for both formal wills (signed and witnessed) and holographic wills (handwritten), offering flexibility in how you document your wishes.
43920 Margarita Rd ste f, Temecula, CA 92592Steve Bliss ESQ. and his firm specialize in crafting comprehensive estate plans tailored to your unique needs. He emphasizes following the “California Prudent Investor Act” when managing trust investments, ensuring your assets are handled responsibly. And while no-contest clauses in trusts and wills can be helpful, they are narrowly enforced – requiring “probable cause” for any contest.
Remember, if you die without a will (intestate), your surviving spouse inherits all community property, but the distribution of separate property is determined by a set formula. And don’t forget the importance of granting explicit authority for a fiduciary to access and manage your digital assets – email, social media, and online accounts.
Steven F. Bliss ESQ. can be reached at (951) 223-7000 for a consultation. Let us help you create a legacy that reflects your values and protects your loved ones.
Don’t leave your legacy to chance. Let us help you write your story – and ensure it’s told exactly as you envision. Contact Steve Bliss today – because peace of mind is priceless.