Drafting Offshore Indemnity Trust Agreements for Executive Roles
Offshore indemnity trusts isolate executive defense capital from corporate insolvency and hostile boards through irrevocable, offshore asset protection vehicles.
Letter of Wishes
Meaning
An informal document created by the settlor of a trust outlines personal instructions and preferences regarding the management and distribution of trust assets. Unlike the formal trust deed, a letter of wishes is not legally binding on the trustee but offers a highly influential guide for the exercise of fiduciary discretion. This document allows the settlor to communicate nuance and changing family dynamics to the trustee without needing to amend the trust deed itself.
Operational Influence
Trustees consult this document regularly to make informed choices that align with the original intentions of the settlor. When executing a letter of wishes, the trustee can consider the specific needs of beneficiaries, such as funding education, purchasing a home, or distributing business assets. This flexibility is particularly useful when unforeseen circumstances arise that were not anticipated when the trust deed was drafted, allowing the trustee to act with empathy and precision.
Confidentiality Benefit
Maintaining confidentiality is a primary reason for using this informal document rather than a formal amendment to the trust deed. A letter of wishes is typically kept private between the settlor and the trustee, and is not generally disclosable to beneficiaries or third parties. This privacy prevents conflicts among family members and ensures that sensitive instructions regarding specific beneficiaries do not become a source of dispute.
Fiduciary Burden
Despite its non-binding nature, the document must be handled with care to avoid creating legal complications or restricting the trustee’s discretion. If a trustee treats the letter of wishes as an absolute instruction rather than a flexible guide, they may be accused of failing to exercise independent judgment, which is a breach of fiduciary duty. This means the trustee must balance the settlor’s guidance against the current needs of the beneficiaries and the prevailing market conditions, ensuring that the decision-making process remains legally defensible under all circumstances, even if this requires going against the settlor’s expressed preferences to protect the overall interests of the estate.