What Are the Functions of (a) a Letter of Wishes, and (B) a Protector of a Trust? in What Ways, If Any, Do These Functions Overlap?

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  • Topic: Trust law, Beneficiary, Wills and trusts
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  • Published : May 6, 2013
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What are the functions of (a) a letter of wishes, and (b) a protector of a trust? In what ways, if any, do these functions overlap?
(a) Letter (or memorandum) of wishes is a document drafted by the settlor of a trust to the trustees of this trust and expressing the settlor’s wishes as regards the management of the trust (including distributions, etc.). Under English law creation of a trust must mean that an actual transfer of the trust’s assets has taken place and trustees have become the legal owners of those. Thus, the settlor’s is considered to be out of the picture. Accordingly, the settlor of a valid trust cannot give orders to trustees as to the way they manage the trust and discharge their duties. The conclusion is that any wishes of the settlor, apart from those being fixed in the terms of the trust on its creation, must not be considered binding upon the trustees, otherwise the trust may fail (as held in Chen v Ling, 2000). In terms of the question given – it means that the function of being a legally binding and a mandatory instruction for the trustees do not apply. The real functions of letters of wishes might be divided into two groups: 1. functions for a settlor of a trust, 2. functions for trustees. 1. Settlors of trusts use letters of wishes as a way to influence the management of the assets transferred to trust even after the trust is created. Even if the wishes expressed are really considered by both parties as wishes only (i.e. not orders of any kind) – trustees are usually ready to take them into account all the same, to avoid possible conflicts with the settlor, protector or beneficiaries, if the latter are influenced by the settlor (or else the settlor may be a beneficiary himself). Such conflicts may possibly lead to litigation or to trustees’ replacement (for instance, by a protector, who may be given such powers). In practice, letters of wishes are being occasionally updated, so that trustees are aware of the current thoughts of settlors...
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