Mistakes to Avoid When Drafting Offshore Letters of Wishes

A well-crafted offshore letter of wishes can be the single most useful piece of guidance your trustees ever receive—and the quickest way to sow confusion if it’s done badly. I’ve seen both outcomes. In one family, a thoughtful two-page letter kept distributions steady through a messy divorce and a currency crisis. In another, a vague, contradictory note triggered three years of litigation and a frozen investment portfolio. This guide sets out the traps I see most often and how to sidestep them, so your letter informs rather than undermines your trust.

What a Letter of Wishes Really Is (and Isn’t)

A letter of wishes is a non-binding document from the settlor that guides trustees on how to exercise their discretion—who should benefit, when, how, and why. It’s not part of the trust deed, it doesn’t change the trust’s terms, and it shouldn’t handcuff the trustees. Think of it as a compass, not a map.

This distinction matters. Courts in common law jurisdictions regularly affirm that trustees may consider letters of wishes but must not treat them as instructions. Key cases like Schmidt v Rosewood Trust (2003) and Breakspear v Ackland (2008) emphasize two practical points: beneficiaries may sometimes see the letter (often via the court’s discretion), and trustees must retain independent judgment.

With that framing, let’s look at common mistakes and how to avoid them.

Mistake 1: Writing It Like a Set of Orders

If your letter reads like a rulebook—“must,” “shall,” “only,” “under no circumstances”—you risk fettering trustee discretion. That’s a fast way to create legal and practical problems, especially if the trust deed explicitly prohibits directions from the settlor.

Better language:

“My strong preference is…”

“I hope the trustees will consider…”

“Subject to their independent judgment, I would like the trustees to give priority to…”

Real-world tip: If you feel tempted to instruct, pause. Either the trust deed needs amending (through proper legal channels), or you need a different fiduciary framework (e.g., a protector with reserved powers). Don’t try to hack legal structure with an informal letter.

Mistake 2: Conflicting with the Trust Deed or Governing Law

I’ve seen letters that ask trustees to benefit people who aren’t beneficiaries, override spendthrift clauses, or contradict reserved powers. A letter can’t do any of that. At best, trustees will ignore the conflicting parts; at worst, the conflict will fuel disputes.

How to fix it:

Ask your lawyer to map your wishes against the deed. A 30-minute review now avoids months of cleanup later.

If you want to change who can benefit or how, use a deed of addition/removal or a variation mechanism, not your letter.

If the trust sits in a forced-heirship jurisdiction or interacts with one (for example, beneficiaries live there or assets are located there), ensure your trust deed has robust anti-forced-heirship provisions. Don’t rely on a letter to do that work.

Mistake 3: Being Either Too Vague or Too Prescriptive

Two extremes cause trouble:

The “be good stewards” letter that says nothing practical.

The “pay my eldest 10% of dividends from XYZ Co. every quarter forever” letter that hamstrings fiduciaries and dates instantly.

Aim for principles with practical examples:

Priority hierarchy (e.g., education and healthcare first; housing assistance second; lifestyle support third).

Circumstances to avoid distributions (e.g., addiction, bankruptcy, coercive relationships).

Ranges instead of fixed amounts (e.g., “consider annual distributions in the range of 3–5% of trust assets for the family unit, adjusted for market conditions”).

Pro move: Include a one-page “distribution matrix” that trustees can apply to scenarios. It should be flexible, not a schedule of entitlements.

Mistake 4: Failing to Update the Letter

Families evolve: marriages, divorces, births, business exits, relocations. Trustees left with a stale letter will either freeze or make calls you don’t like.

Practical cadence:

Review annually; update meaningfully every 2–3 years or after key life events.

Version control with dates and a clear revocation line: “This letter supersedes all prior letters of wishes.”

Keep it short enough (two to five pages) that you’ll actually maintain it.

In my files, seven out of ten new clients hadn’t updated their letter in five years. Those letters were usually the ones causing practical headaches.

Mistake 5: Telegraphed Tax Avoidance

Letters sometimes include sentences like, “This structure is to avoid all taxes.” That may read poorly in discovery and can be misconstrued by revenue authorities under general anti-avoidance rules. It also erodes trustee confidence.

Cleaner approach:

Focus on legitimate objectives: asset protection, continuity, family governance, responsible wealth transfer, philanthropy, and long-term investment stewardship.

If tax efficiency is a goal, frame it responsibly: “I support tax compliance and prudent, lawful tax efficiency.” Leave technical tax strategy to formal advice letters, not your wishes.

Mistake 6: Forgetting Disclosure Risks and Data Privacy

Many people assume letters of wishes are secret. Sometimes they remain private; sometimes they don’t. Courts may order disclosure in beneficiary litigation (Schmidt v Rosewood), trustees may share summaries, and any email attachments you send can end up in a data room during a dispute.

Guardrails:

Keep tone professional and respectful; avoid emotional outbursts that read badly later.

Don’t include sensitive personal data you don’t need (IDs, account numbers). Use descriptors instead (full names, dates of birth).

Store the letter within the trustee’s secure system. Avoid forwarding to bankers, advisors, or family chat groups. Under the Common Reporting Standard (adopted by over 120 jurisdictions) and various data protection regimes, the more you “spray” documents around, the more visible and risky they become.

If using email, send as a password-protected PDF and request confirmation that it’s saved in the trust’s document vault.

Mistake 7: Drafting with Emotion Instead of Judgment

Letters sometimes read like manifestos: settling scores, comparing children, or punishing lifestyle choices. Courts, trustees, and beneficiaries will read your words more literally than you intended.

A better strategy:

State your values without labeling family members. “I value work ethic and contribution” beats “Alice is lazy.”

Explain rationale once, neutrally: “I wish to prioritize education and entrepreneurship because those investments can compound for the family.”

Anticipate sensitive topics like addiction or mental health with compassion and practical guardrails (e.g., independent medical opinions, phased support, rehabilitation funding with conditions).

Mistake 8: Ignoring Beneficiary Readiness and Governance

Money without guidance can be gasoline. Rather than listing entitlements by age alone, tie support to milestones and readiness.

Ideas that work:

“Before large capital distributions, I would like trustees to consider financial literacy training, mentoring, or an internship in the family business.”

“For first-time home purchases, consider matching funds contingent on evidence of savings and an independent affordability assessment.”

“For entrepreneurship, consider staged funding with agreed KPIs and a clawback if the venture deviates materially from the approved plan.”

If your trust is sizable, mention a family council, an annual meeting with trustees, or appoint a “family adviser” (non-fiduciary) who can interpret your values.

Mistake 9: Overlooking Forced Heirship, Sharia, and Local Claims

Cross-border families live in multiple legal systems. A letter of wishes won’t defeat forced heirship in isolation, nor will it by itself shield assets from matrimonial claims or creditor actions.

What helps:

Ensure the governing law of the trust includes firewall provisions that disregard foreign heirship claims.

In Sharia-influenced contexts, decide whether to mirror Islamic inheritance principles or articulate a different approach. If different, explain your reasoning respectfully; that explanation may matter if courts weigh your intent.

For potential divorce scenarios, you can express a hope that trustees exercise caution around distributions that could be characterized as nuptial settlements. Don’t overreach—trustees must still exercise judgment in real time.

Mistake 10: Treating the Letter as the Place to Fix Trustee or Protector Problems

If you don’t trust your trustee or your protector, rewrite the governance—don’t try to micromanage with your letter. A letter can’t cure poor fiduciary fit, nor can it compel action.

Do this instead:

Appoint a protector with narrow, clearly defined powers if you want oversight.

Use a non-binding consultation clause in your letter to name people trustees should speak with (e.g., long-standing CFO, family adviser).

Encourage an annual alignment call with minutes: it keeps everyone honest and reduces misinterpretation.

Mistake 11: No Plan for Your Incapacity or Death

Trustees feel exposed when a letter becomes obsolete because the settlor can’t update it. If you lose capacity or die, the letter carries extra weight in practice—so plan for that.

Include:

A successor “voice of intent” (e.g., spouse, sibling, or a family council) whom trustees may consult, without creating a new decision-maker.

Guidelines for sensitive periods (e.g., “For the first 12 months after my death, prioritize stability and avoid major capital distributions except for emergencies.”)

An invitation to record trustee rationale in writing when they depart from your wishes, so the file shows good process if challenged.

Mistake 12: Forgetting Operating Companies and Illiquid Assets

Many offshore trusts hold private companies, real estate SPVs, or fund interests. Generic distribution guidance doesn’t help trustees run an operating company through a downturn.

Add practical pointers:

Investment philosophy at a principle level (long-term bias, dividend policy preferences, leverage limits).

Board governance preferences (independent non-executive director, quarterly reporting, auditor rotation).

What matters in a sale decision (e.g., focus on strategic buyers, require independent valuation, protect employee base where feasible).

Avoid dictating transactions. Provide priorities and guardrails; let trustees and directors exercise fiduciary duties.

Mistake 13: Sloppy Mechanics—Dates, Signatures, and Translation

Letters go wrong for silly reasons:

Undated or unsigned documents leave trustees guessing which one is current.

Multiple versions with different advice circulate; no one knows which to apply.

Poor translations alter meaning.

Checklist:

Date the letter. Sign it. Number the pages. Put initials on each page if your jurisdiction’s practice favors it.

Start with: “Guidance only—non-binding. Trustees must exercise their independent discretion.” Then add a revocation line.

If you write in a non-English language, provide a certified translation and state which version prevails in case of conflict.

Keep it to 2–5 pages plus a one-page annex if needed. Clarity beats comprehensiveness.

Mistake 14: Fettering Investment Discretion

“I don’t want any equities” or “Never sell the family business” sounds decisive, but it boxes in trustees, who have statutory and fiduciary investment duties. If markets change or the business deteriorates, they may be unable to follow your wishes safely.

Smarter phrasing:

“I prefer a long-term, globally diversified approach. If equities are used, I favor low-cost, broad-based exposure.”

“Regarding the family business, I would like trustees to give strong preference to maintaining control while performance targets are met and key-person risk is managed. If strategic circumstances warrant a sale, I prefer buyer types A/B over C.”

This signals direction without tying hands.

Mistake 15: Using Hard Percentages Without Contingencies

“I want 40% to Child A, 40% to Child B, 20% to charity” sounds clean until one child has special needs, another sells a startup, and the market cuts your trust in half. Trustees then face a math problem where a judgment call would be better.

A better structure:

Name priorities (education, health, home purchase assistance).

Sketch a baseline allocation with discretion to adjust based on needs, resources, and behavior.

Require regular reassessment: “Review each beneficiary’s circumstances at least annually and adjust distributions accordingly.”

Mistake 16: Sharing the Letter with Banks or Third Parties

I’ve seen letters uploaded to bank KYC portals and then surfaced in unrelated matters. Don’t assume institutional walls are airtight.

Policy:

The letter lives with trustees and their legal counsel.

If a third party needs comfort (e.g., a family office COO), create a separate, sanitized memorandum or a trustee minute instead.

Mistake 17: Failing to Coordinate with Your Will, Prenups, and Powers of Attorney

If your will outlines a plan that conflicts with your trust letter, expect confusion or challenges. Same with prenuptial agreements, shareholder agreements, or letters to executors.

Coordination points:

Ensure testamentary gifts don’t presume trust distributions.

If a prenup bounds gift expectations, don’t promise contradictory support in your letter.

Align your power of attorney: if an attorney can communicate with trustees on your behalf, say so in both documents and set boundaries.

Mistake 18: Treating Emails and WhatsApp Messages as Harmless

Informal messages are discoverable and often lack the nuance of a considered letter. I’ve seen single-sentence emails used to attack trustees: “Please stop all payments to X immediately.” That’s unhelpful context if the letter says something else.

Habit shift:

Keep messaging channels for scheduling or logistics.

Funnel material guidance through formal letters or trustee meetings with minutes.

If you do send an email with substantive guidance, export it to PDF, label it clearly, and add it to the trust document vault.

Mistake 19: No “Practical Test Drive”

Before finalizing, walk through real scenarios with your trustee or adviser:

A beneficiary develops a gambling addiction; what does your letter guide the trustees to do?

Markets drop 25%; do your distribution preferences flex?

You die and your spouse remarries. How should trustees balance your spouse’s security with preserving capital for children?

A beneficiary relocates to a high-tax jurisdiction; should trustees reshape distributions (e.g., more in-kind benefits, fewer cash distributions)?

This rehearsal surfaces gaps fast. A 60-minute scenario session improves letters more than any redraft in isolation.

Mistake 20: Ignoring Philanthropy

If philanthropy matters to you, say how. Trustees constantly field grant requests from family members. Without guidance, they’ll either default to “no” or dilute impact.

Add:

Focus areas (education, health, environment) and what success looks like (e.g., measurable outcomes over capital campaigns).

Budget ranges or triggers (e.g., 1–3% of net trust income annually when markets are positive).

Governance (e.g., a small grants committee including two family members and one independent adviser).

Step-by-Step: Draft a Robust Letter in 90 Minutes

Here’s a practical sprint I use with clients.

1) Clarify your purpose (10 minutes)

Write three sentences: why the trust exists, what you’re protecting, and what behaviors you want to encourage.

Example: “I created the trust to provide stability across generations, fund education and entrepreneurship, and protect assets from shocks and poor decisions.”

2) Sketch your priorities (10 minutes)

Top five priorities in order (e.g., health, education, housing support, entrepreneurship, responsible lifestyle support).

Any red lines (e.g., no distributions to fund speculative trading or high-interest debts).

3) Define your beneficiary lens (10 minutes)

Who has priority and when (spouse/partner, children, grandchildren).

Circumstances that increase or decrease support (disability, addiction, exceptional achievement, divorce proceedings).

4) Add investment and asset pointers (10 minutes)

One paragraph on investment philosophy.

One paragraph on operating companies or illiquid assets.

5) Governance and voices (10 minutes)

People trustees may consult (with contact roles, not personal data).

Frequency of check-ins, preference for annual letters from you, and a successor consultative voice.

6) Edge cases (10 minutes)

Bankruptcy, litigation, coercive relationships, excessive leverage, risky business ventures.

A short protocol: independent adviser review, staged support, or suspension of distributions.

7) Tone and flexibility (10 minutes)

Replace “must/shall” with “prefer/hope/ask that trustees consider.”

Add the non-binding statement prominently.

Include a revocation clause and version control.

8) Review with counsel (20 minutes)

Ask your lawyer to sanity-check conflicts with the deed or law, suggest cleaner phrasing, and confirm no inadvertent fettering of discretion.

You’ll end up with a clean, usable 2–4 page document that trustees can actually apply.

Helpful Phrases (and What to Avoid)

Use these:

“Subject to their independent discretion, I ask trustees to give priority to…”

“I prefer that support for adult beneficiaries be tied to demonstrable effort or contribution, such as employment, study, or caregiving.”

“If a beneficiary faces addiction or coercion, I hope trustees will suspend discretionary distributions and instead fund appropriate treatment or protective arrangements.”

“I encourage trustees to document their reasoning when they depart from these wishes.”

Avoid these:

“Under no circumstances pay…”

“Always/never…”

“The purpose of this trust is to avoid taxes…”

“Pay my children equal annual amounts regardless of circumstances.”

Case-Law Reality Check: Confidentiality Isn’t Absolute

Two decisions shape the disclosure conversation:

Schmidt v Rosewood Trust (Privy Council, 2003): There’s no absolute beneficiary right to documents, but courts can order disclosure in the interests of justice. Letters of wishes may be disclosed if fairness requires it.

Breakspear v Ackland (England & Wales, 2008): Trustees have discretion on disclosure; confidentiality is recognized but not guaranteed.

Practical implication: Write as if a calm, future version of your family—and possibly a judge—will read the letter. Professional, principled, and measured wins the day.

Compliance and Reporting: Don’t Create Avoidable Flags

CRS/FATCA: Trustees in participating jurisdictions report controlling persons and financial data. Your letter won’t change reporting obligations, but careless language can invite scrutiny.

Source of wealth: If your letter references assets with unclear provenance, banks and trustees may escalate reviews. Keep the letter values-led; leave evidential detail to KYC packs and legal memos.

Data protection: GDPR-style regimes give individuals access rights subject to exemptions. Minimizing personal data in the letter narrows risk.

Practical Examples

Example 1: Education-focused trust

“I hope trustees will prioritize funding for schooling and university, including tuition, reasonable living expenses, and internships. Where possible, pay institutions directly.”

“For postgraduate study, I prefer merit-based programs aligned to the beneficiary’s demonstrated interests.”

Example 2: Entrepreneurship support

“For new ventures, consider initial funding up to [amount or range] with staged tranches contingent on agreed milestones and independent review. Avoid personal guarantees.”

“Decline funding for ventures where the beneficiary is a passive investor, unless there is a clear development rationale.”

Example 3: Housing assistance

“I prefer assistance for a first home only where the beneficiary contributes at least [X%] of the purchase price and maintains mortgage payments personally. Consider second-charge security in the trust’s favor.”

Example 4: Sensitive issues

“Where a beneficiary is subject to undue influence, coercive control, or addiction, please pause discretionary cash payments. I support funding for professional help and safe housing arrangements under trustee oversight.”

Common Drafting Pitfalls I See Weekly

Using the letter to “name and shame” family members. It backfires.

Promising support to non-beneficiaries (e.g., long-term partners) where the deed excludes them. Either add them formally or frame support via allowed structures (e.g., loans, services, or benefit in kind).

Mandating specific investment products. Markets evolve; trustees need freedom.

Excessive length (10+ pages). Long letters are rarely read carefully in a crisis.

No contingency for a beneficiary’s wealth exceeding expectations (e.g., a successful exit). Consider tapering support for ultra-wealthy beneficiaries.

Silent on charities despite public philanthropic persona. Trustees then face PR vs. policy tension.

Forgetting digital assets (domain names, crypto wallets, licensing rights). Include a line asking trustees to appoint qualified custody and compliance providers and to follow jurisdictional guidance on digital assets.

Not anticipating trust migration. If you may change trustee or jurisdiction, note that your wishes apply regardless of future trustee location, subject to law.

How Trustees Actually Use Your Letter

Good trustees do three things with a strong letter:

They benchmark decisions against your stated values and priorities.

They keep a record of how they applied or departed from your wishes.

They use it to explain decisions to beneficiaries, reducing friction.

Give them a letter they can point to with confidence when saying yes—or no.

A Simple Structure You Can Follow

Opening statement of purpose and non-binding status.

Beneficiary priorities and guiding principles (1–2 pages).

Specific contexts: education, health, housing, entrepreneurship, philanthropy (as relevant).

Investment and operating company principles (half a page).

Governance: who to consult, meeting cadence, successor voice (half a page).

Edge cases and risk management: addiction, divorce, bankruptcy (half a page).

Administrative matters: confidentiality, version control, translation, storage (short section).

Closing appreciation for trustee judgment and a request to document reasoning.

Quick Do/Don’t Checklist

Do:

Keep it clear, calm, and concise (2–5 pages).

Use preferences, not commands.

Align with the trust deed and governing law.

Update regularly and version-control it.

Anticipate scenarios and name priorities.

Coordinate with your will, prenups, and powers of attorney.

Build in governance and successor voices.

Store securely with trustees; limit circulation.

Don’t:

Try to alter beneficiaries or powers via the letter.

Confess tax-driven motives or emotional grievances.

Mandate fixed payments regardless of circumstances.

Over-specify investments or transactions.

Ignore cross-border realities or forced heirship risks.

Treat WhatsApp messages as harmless guidance.

Assume the letter will stay private forever.

A Word on Tone, Trust, and Longevity

The best letters I’ve read do three things exceptionally well. First, they state values plainly—education, contribution, resilience, and kindness—then show how those values translate into money decisions. Second, they respect trustee judgment rather than undermining it. Third, they feel like a note from a thoughtful steward, not a nervous controller. That tone is hard to fake, but it’s the difference between a document trustees lean on and one they tiptoe around.

If you’re revising your letter now, spend more time on clarity than on cleverness. Keep it human. Identify what you want to protect, where you want to be generous, and where discipline matters. Then give your fiduciaries the space—and the confidence—to do the job you hired them to do.