A discretionary trust letter of wishes: useful guidance, not a substitute for the deed

A letter of wishes can explain why a discretionary trust exists and what the person establishing it hopes the trustees will consider. It can provide valuable context when family circumstances are complicated or change over time.

Its role is different from the trust deed. Trustees need to exercise the powers and duties they actually have, rather than treating an informal letter as authority to rewrite the arrangement.

Start with the trust's legal powers

GOV.UK describes discretionary trusts as arrangements in which trustees can make specified decisions about benefits, within the deed. Establish the beneficiary class, available powers and any restrictions before drafting guidance.

A letter cannot simply add someone who is outside the permitted class or require a payment the trustees have no power to make. If the legal structure does not match the intended purpose, take advice on that mismatch directly.

Keep the deed, amendments and professional advice together so the letter is read in context.

Explain priorities rather than writing conflicting instructions

Legal & General's explanation of letters of wishes distinguishes non-binding wishes from binding legal documents. A solicitor should help ensure a trust-related letter supports the particular arrangement.

Useful context might include a wish to support education, respond to disability-related needs or consider other resources available to potential beneficiaries. Explain the reasons, especially where equal payments are not the intended approach.

Avoid wording that presents discretion as an empty formality. Trustees may need to respond to circumstances that could not be anticipated when the letter was written.

Show how competing needs might arise

Consider a fictional trust with £150,000 and three potential beneficiaries. One seeks £20,000 for education, another £35,000 towards accessible housing, and the third has no immediate request.

The two requests total £55,000, leaving £95,000 before costs, tax and investment changes if both are approved. That arithmetic helps trustees understand capacity, but it does not decide whether either payment is appropriate or permitted.

A letter can explain which considerations matter. It should not imply that the writer's example determines every future decision regardless of the deed and beneficiaries' circumstances.

Keep sensitive information factual

Explain relevant needs and concerns without unnecessary personal criticism. A letter that inflames a family dispute may make administration harder while adding little useful guidance.

Separate known facts from assumptions and identify information that could become outdated. For example, an expectation that one beneficiary will receive another inheritance should not be treated as a confirmed resource without evidence.

Ask the solicitor about confidentiality and disclosure rather than assuming the letter can never be seen by anyone else. Do not use it to hide arrangements that should be disclosed to professional advisers or trustees.

Give trustees a practical decision record

For each significant request, trustees can record the relevant power, information considered, conflicts, advice obtained and decision reached. The appropriate form of record depends on the trust and legal advice.

Keep a proposed distribution distinct from an authorised payment and a completed transaction. A spreadsheet marking £20,000 as “agreed” is not the same as evidence that the required decision process has occurred.

Investment planning should follow the expected needs and the trust's obligations. If funds may be distributed soon, tell the investment adviser rather than leaving the portfolio managed against an outdated long-term assumption.

Date and review the guidance

Use a clear date and identify the trust concerned. When updating the letter, establish which version supersedes earlier guidance and make sure trustees can locate the current document.

Review after material family changes, but do not assume changing the letter changes the deed, tax position or existing beneficiary rights. Those may require separate professional work.

A productive advice meeting brings together the deed, current wishes, accounts and anticipated requests. The solicitor can address legal powers and administration; the financial adviser can assess investments and cash needs within that framework.

Read financial advice for trusts, the roles of adviser and solicitor and cashflow modelling.