Letters of wishes - confidentiality

It has become routine, with the increased use of discretionary trusts in modern times, for settlors to provide trustees with an informal expression of the settlor’s wishes over the matters which the trustees might take into account when considering, inter alia, the exercise of the trustees’ dispositive powers.

It has long since been accepted that letters of wish do not represent trust documents which are automatically available to trust beneficiaries, but the circumstances in which letters of wish fall to be disclosable to beneficiaries has remained subject to doubt.

In the context of family trusts, but not commercial trusts such as pensions and employee benefit schemes, the court has now provided useful guidance in Breakspear and others v Ackland and another [2008] EWHC 220 (Ch).

In default, the wishes of the settlor, whether expressed in writing or, on occasion, verbally, are inherently confidential in nature, and a request by a beneficiary for disclosure need be considered by the trustees in the light of the good administration of the trust and the discharge of the trustees' powers and discretions. The settlor's ongoing desire for confidentiality, once the trust has been constituted, is not a relevant issue.

A request for disclosure by a beneficiary must be considered by the trustees, but the trustees' are not obliged to give their reasons for denying any such request.   In a difficult case, the trustees may, of course, apply to the court either for directions or for the sanctioning of the trustees' decision to deny a request for disclosure.