The disposition of a loved one’s personal and household items can be a source of disagreement and upset among family members during an already emotional time. There is much that the estate planner and his or her client can do to minimize any discord that might arise during this process. A powerful planning tool in this regard can be a letter of wishes.
A letter of wishes appeals to many clients who want the flexibility to make changes to their wishes regarding their personal items without needing to see a lawyer to update a will. Some clients have not fully considered to whom personal items should be given. Many others are already planning to prepare something akin to a letter of wishes and welcome the opportunity to alert their executors and beneficiaries to this intention via their will. Others appreciate a letter of wishes for the potential privacy it offers and the opportunity to communicate wishes in a more personal and sentimental fashion than a formal will typically permits. Often a client will welcome the suggestion to prepare a letter of wishes if it is made.
Although it has many benefits, a letter of wishes may have significant drawbacks and is not appropriate for every situation. This post and my next will discuss some of the positives, negatives and planning pitfalls in using a letter of wishes.
First, what is a letter of wishes? For the purposes of this series of posts, we will focus on a letter which expresses an individual’s wishes and desires regarding his or her personal and household items on his or her death. Of course, the use of a letter of wishes has important applications in other contexts (such as trust management/trustee discretion), but these applications carry with them their own set of issues.
If a testator has or intends in the near future to prepare a letter of wishes, it should generally be referred to in the will so that the executors are alerted to its existence. The potential benefits of the letter of wishes will be lost if the letter is not found until after decisions regarding the distribution of personal items have already been made (and the executors will be placed in a very uncomfortable situation).
It is important that the letter and the reference to the letter in the testator’s will clearly reflect the testator’s intention that the letter be precative and not legally binding in nature. This should be done to avoid any question as to whether the letter of wishes constitutes a testamentary disposition and is therefore governed by the provisions of the Succession Law Reform Act, R.S.O. 1990, c. S.26 (the “SLRA”).
The term “will” in the SLRA is broadly defined to include “any testamentary disposition” and so can encompass dispositions of the sort generally included in a letter of wishes, If an intended letter of wishes is read as expressing the testator’s directions rather than wishes, there is a risk that the letter may be considered a “will” for SLRA purposes. This could have dire consequences for the client’s entire estate plan. For starters and less seriously, the letter of wishes itself will be invalid unless it meets the formal requirements for validity set out in the SLRA. More concerningly, the letter of wishes may satisfy these requirements and therefore be considered a new “will” revoking the clients prior (and intended) will. This situation will be especially messy if the letter of wishes is not referred to in the client’s “actual” will and so is not discovered until after property has been distributed.
It is therefore essential that the letter and the reference to it in the will indicate that the letter reflects the clients wishes only. As further reinforcement, the letter may include a statement that the client understands and intends that the letter will not be legally binding on his or her executors or the beneficiaries of his or her estate.
Stay tuned next month for more tips on letters of wishes.