Do you need a Memorandum of Wishes for your Family Trust?
Protect your wishes — contact expert family trust lawyer, Peter Smith today
1 May, 2014 | Peter Smith
A Will generally deals with all your property in your personal name, whereas a Memorandum of Wishes deals with your trust property.
Without a Memorandum of Wishes, the trustees left after you pass away have no clear guidance on how you want the trust managed.
In a Will, the executor or trustee must carry out your instructions. They have no power to exercise any discretion as to any distributions or beneficiaries.
On the other hand, trustees of a trust, have complete discretion as to how capital and income from the trust fund are distributed among beneficiaries (within the powers set out in the Trust Deed).
Trustees also have complete discretion as to the use of trust assets, for example allowing a beneficiary to live in a property owned by the trust.
The settlor of the trust (the person who creates the trust) can prepare a Memorandum of Wishes. The settlor can do this on their own or with the help and advice of a solicitor.
As settlor a Memorandum of Wishes lets you make a clear statement of your intentions for setting up the trust.
You can provide guidance on how you want the trust managed including:
No! By law trustees must have complete discretion BUT prudent trustees are unlikely to ignore a settlor wishes.
Because it’s not legally binding, this means it can be easily reviewed and updated to reflect any change in your circumstances.
If you wish to make any intended distributions legally binding, you should explore the option of a Deed of Distribution which is binding on the trustees.
A Memorandum of Wishes should be signed and dated. There is no requirement for the document to be witnessed but it can be.
Only those people who you choose to show, as it is a confidential document, (provided this wish is recorded in your Memorandum of Wishes).
There is a presumption that all other trust information is to be provided to beneficiaries by the trustees.
We recommend that you share your Memorandum of Wishes with the other trustees, keep it safe with your lawyer in their deeds store room, and review and update it on a regular basis where necessary.
If you wish to create a Memorandum of Wishes or need any advice regarding family trusts please contact experienced Auckland Family Trust Lawyer, Peter Smith by phone on 09 837 6882 or email firstname.lastname@example.org
20 March, 2012 | Peter Smith