Part Two: Amending A Letter Of Wishes

• Published date: 06 November 2023
• Subject Matter: Corporate/Commercial Law, Trusts
• Law Firm: Kennedys Law LLP
• Author: Ms Laura Williamson and Michele Gavin-Rizzuto

In part one of the mini-series we looked at the status of letters of wishes, the extent to which trustees are bound by letters of wishes, and the circumstances in which a trustee can (or should) depart from the settlor's wishes. This second essay addresses the extent to which it is possible to amend or replace a letter of wishes and the effect of the same.

Whilst a letter of wishes will often be drafted at or around the time the trust is settled, it is not uncommon for a settlor to update his letter of wishes during the course of his lifetime, sometimes many times. Indeed, it is advisable for a settlor to review his letter of wishes regularly to ensure that it still represents his intentions in relation to the trust. Oftentimes, a letter of wishes will expressly state that it is subject to revision in future.¹

It is of note that, although the focus of this essay is on letters of wishes, it is also possible for the settlor to convey his wishes to the trustee orally, although of course, as a practical matter, this approach leaves more scope for the settlor's wishes to be misunderstood, misremembered or overlooked.²

Although there is scope for argument to the contrary,³ it is the authors' view that the initial and any subsequent letter of wishes will have the same status in most instances when considering whether the trustee has adequately deliberated in relation to a proposed exercise of its discretion. When a letter of wishes is provided to the trustee, it is a source of guidance for the trustee and is a relevant consideration in relation to the trustee's decision-making. When a letter of wishes is replaced by another letter addressing the same issues, the original letter may cease to be of effect (provided the wishes expressed in the later letter are consistent with the purpose of the trust); if the later letter deals with different issues, it will be treated as supplementary and the trustee will derive guidance from both letters.⁴

Support for this contention can be found in the case of Abacus Trust Co (Isle of Man) v Barr,⁵ in which Lightman J approached his analysis on the basis that the trustee was required to consider the settlor's wishes as at the time it exercised a trust power. Abacus was approved in Pitt v Holt,⁶ although the latter case did not expressly deal with the issue of the timing of letters of wishes at all. Notwithstanding this, Pitt v Holt has been treated by some as representing the culmination of a line of authority confirming a trustee's obligations to consider the settlor's wishes as they are expressed...