Letter of Wishes Legal Status Across Jurisdictions

The letter of wishes legal status question has no single answer, because each jurisdiction decides for itself what weight a non-binding settlor note carries. In almost every seat the letter is guidance: the trustee must read it and may follow it, but the trust deed and the trustee's own judgment come first. What varies is how a court treats it in a dispute, whether a beneficiary can demand to see it, and how much it can reveal about the way the trust is really run.

This page explains those differences and how a letter is prepared and stored, so that it supports the structure rather than undermining it.

What a letter of wishes is, and what it is not

A letter of wishes is a private document in which the settlor describes how they hope the trustee will use its discretion. It sits beside the trust deed and is not part of it. Typical subjects include:

• hopes on the timing and recipients of distributions;
• the order of priority among beneficiaries;
• investment attitude and risk appetite;
• views on education and family values;
• guidance for events such as divorce or dependency.

It is not an instruction. If it were binding, it would read as a reserved power or as evidence that the trust is a sham, and the structure could be recharacterized. That is why the wording matters as much as the content.

Where the letter sits

The diagram shows the relationship between the instruments and the people who may or may not see them.

The deed binds. The letter informs. The trustee decides. The beneficiary and the court see only what the applicable law and the deed allow them to see.

How courts treat a letter of wishes

Courts in common-law seats generally treat the letter as a relevant consideration, not a command. A trustee who ignores it without thought may be criticized; a trustee who follows it blindly may be criticized too, because discretion must be exercised genuinely and not handed over. Courts have also looked at letters when they assess whether a trustee acted properly or whether a settlor kept too much control.

In civil-law seats, the starting point is different. Switzerland recognizes foreign trusts under the Hague Trusts Convention, but a letter of wishes has no formal status in statute. A Swiss court looks at the deed, the governing law and the facts, and treats the letter as evidence of intent at most. Which law governs the trust is therefore the first question; see governing law versus seat.

Three practical points follow:

1. Consistency with the deed. A letter that contradicts the deed does not override it, but it can create doubt about what was intended.
2. Evidence of control. A letter written as a list of orders can be read as the settlor continuing to run the trust.
3. Evidence of process. Trustee minutes showing that the letter was considered, and why a decision departed from it, are valuable in any later challenge.

Disclosure: who can ask to see it

Whether a beneficiary can obtain the letter depends on the seat, the governing law and the wording of the deed. Some legal systems treat it as a confidential document that beneficiaries cannot demand. Others allow a court to order disclosure where it helps decide a dispute, and a few allow access when the letter is part of the trustee's decision record.

Divorce courts, tax authorities and foreign enforcement proceedings can also ask for documents. Reporting regimes under EAR / AEOI / CRS concern account data rather than private letters, but the letter can still surface in a related inquiry. For the wider picture of what is disclosed where, see trust registers and privacy.

This table is a simplification. The answer for a given trust depends on its governing law, its seat and the people involved, and it needs individual analysis.

Tax context in Switzerland

Swiss tax treatment of a trust turns on the type of trust and the settlor's domicile, not on a letter of wishes. For an irrevocable discretionary trust, the assets and their returns remain attributed to the settlor if the settlor is domiciled in Switzerland when the trust is created, with the same consequences as a revocable trust. If the settlor is domiciled abroad at that moment, the assets are attributed neither to the settlor nor to a beneficiary. The trust itself has no legal personality under Swiss law, and the trustee holds the assets in a fiduciary capacity.

A letter that suggests the settlor still decides everything could weaken a position built on genuine trustee discretion. This is one reason to align the letter with the revocable or irrevocable choice and with the discretionary trust design.

How a letter is prepared and kept

A well-prepared letter usually follows a short routine:

• The settlor states objectives and values, avoiding commands such as "the trustee must".
• The drafter checks it against the deed and the governing law.
• The text separates stable principles from points likely to change.
• Signed copies are held by the trustee, with a clear record of the date of each version.
• The letter is reviewed when the family changes: a marriage, a birth, a relocation, or a change of seat.

Storage is part of the legal position. A copy left in an unsecured location, or shared widely within the family, can lose confidentiality and invite requests for disclosure. A letter should also be revisited when the settlor moves; see trust seat and governing law when the settlor relocates, or when the trust itself moves, as explained in relocating an existing trust.

What the service covers

This service looks at the letter in the setting of the structure it accompanies. It is intended for settlors, families and advisers who want guidance that is clear to the trustee but does not create unintended legal effects. Typical situations include:

• a new trust where the deed is drafted and the letter has not yet been written;
• an existing letter that was drawn up under another seat's practice;
• a family whose circumstances have changed, for example through divorce or a dependent beneficiary;
• a blended family where priorities need careful wording.

The work covers the content of the letter, its consistency with the deed, how disclosure rules are likely to affect it, and how it is stored and updated. It does not replace the trust deed, does not select the trustee, and does not provide tax advice for a particular country of residence. Those questions need their own analysis.

A confidential assessment helps establish which seat's rules are relevant, whether the existing letter creates risk, and what to change. Fees depend on the structure and are indicated after the assessment.