News & Updates

The Memorandum of Wishes to accompany a Trust

Blair Franklin
Published on

This article focuses on a document that sometimes accompanies a family trust called a Memorandum of Wishes (MOW's). This can be particularly helpful when a person or persons who has set up a trust dies to give guidance on how the trustees best manage the trust, thus helping to avoid disagreements or worse still, litigation.

What is a Memorandum of Wishes?

A family trust is usually set up by persons called Settlors. The Trust is administered by trustees for the benefit of beneficiaries (usually the settlors and their family). The MOW's sets out the settlors wishes, and although not legally binding, is usually highly persuasive and can guide the trustee's actions. There is no formula for what the MOW's contains, but it might contain the settlors wishes for:
  • How the trust assets are finally distributed, for example, that within 5 years from the date of death of the last surviving settlor that the assets of the estate be sold and the proceeds distributed equally between their children.
  • Specific guidance about trust assets, such as who can live in a trust property for a period of time.
  • How the trust is to cater for the needs of infant beneficiaries until they reach maturity.

How does a Memorandum of Wishes assist?

While at least one of the settlors is still alive, there is unlikely to be an issue in terms of knowing what the settlors wishes are. But once both settlors die, how do the Trustees know the settlors wishes? A trust usually has a pool of beneficiaries that the trustees can choose to provide for. A written MOW's makes the settlor's wishes known, and thus, significantly easier for the trustees to administer the trust according to the settlor's wishes. For example, if you had a trust where the beneficiaries were the three children of the settlors plus a friend of the settlors, when the time came to distribute the trust, is it the case that the trustees should divide the assets 25% each between those 4 beneficiaries, or that they would distribute say 30% to each of the 3 children and 10% to the friend?

To summarise a MOW's will potentially make the job of the trustees significantly easier and save potential disagreements.

Nothing in this article should be construed as giving legal advice as each situation will vary and require tailored advice. Please contact us if you need to put in place a Memorandum of Wishes for a trust or update an existing one.

Written by Blair Franklin (Partner) with input from Bruno Gin (Partner)