In Ontario, a Memorandum of Wishes (or Letter of Wishes) is a non-binding document that provides personal guidance to your trustee. It tells them how you hope they will use the funds in a discretionary trust (e.g., prioritizing education or a down payment), without restricting their legal flexibility to adapt to future circumstances.
When you create a discretionary trust for your children or grandchildren, you are giving the trustee an incredible amount of legal power. Whether the trust is set up in a wealthy Toronto suburb or a rural community near London, the trustee has the absolute authority to decide when, how, and if the beneficiaries get any money. While this flexibility is brilliant for protecting wealth from creditors or messy divorces, it can leave the trustee feeling overwhelmed by the weight of their decisions.
To solve this, estate planners in Ontario use a “Memorandum of Wishes.” Think of it as a personal letter from you to the trustee, explaining the “why” behind your money. It offers intimate, practical guidance on your family values without tying the trustee’s hands in a rigid legal knot. If you are setting up a family trust and want to ensure your voice is heard long after you are gone, working with an experienced local estate lawyer from our directory is highly recommended. 💼
Step-by-Step Process for Creating a Memorandum of Wishes
Drafting this document requires balancing emotional clarity with legal boundaries. You must express your desires clearly without accidentally creating a legally binding contract that overrides the main trust deed. Here is the standard process.
Step 1: Establish the Main Discretionary Trust
Before you can guide a trustee, you must legally create the trust itself. This is done through a primary legal document, such as an inter vivos Family Trust deed or a testamentary trust inside your Last Will and Testament. Your Ontario lawyer will ensure the main document explicitly grants the trustee “absolute discretion” over the trust capital and income. 📋
Step 2: Outline Your Core Values and Goals
Sit down and think deeply about what you want your wealth to achieve. Do you want the money used primarily for university tuition? Are you hoping the trust will help your children buy their first home in Hamilton or Ottawa? Perhaps you want to ensure a disabled beneficiary has enough funds for private medical care. Jot down these core priorities in plain language.
Step 3: Draft the Memorandum in Plain English
Work with your lawyer to draft the actual letter. Unlike a Will, which is filled with dense legal jargon, the Memorandum of Wishes should be written in your own voice (Plain English). It should explicitly state at the very beginning: “This memorandum is not legally binding and is not intended to create any new legal obligations.” This clause protects the trustee from being sued by an angry beneficiary. 🖊️
Step 4: Address Specific Scenarios
Give the trustee practical examples to help them navigate future requests. For instance, you might write, “I request that you approve any reasonable request for funding a master’s degree, but I would prefer you deny requests for purchasing luxury vehicles before the age of 30.” Providing these specific scenarios acts as a roadmap for the trustee when the beneficiaries inevitably ask for cash.
Step 5: Store and Update the Document Securely
Sign and date the document. You do not strictly need witnesses like you do for a Will, but it is good practice. Store the Memorandum alongside the original Trust Deed or your Will. Because it is an informal document, you can rewrite and update it as often as you like without having to pay a lawyer to redraft your entire estate plan. 📂
Formal Trust Deed vs. Memorandum of Wishes
Understanding the legal hierarchy between these two documents is essential for Ontario estate planning.
| Feature | The Trust Deed (or Will) | The Memorandum of Wishes |
|---|---|---|
| Legal Status | 100% legally binding. The trustee must obey it. | Non-binding. The trustee should consider it, but can ignore it. |
| Language Used | Strict legal terminology drafted by an Ontario lawyer. | Plain English, written in the creator’s personal voice. |
| Public Visibility | May become public record if probated in the Superior Court of Justice. | Remains completely private and confidential. |
| Amendment Process | Requires formal legal amendments, witnesses, and legal fees. | Can simply be torn up and rewritten at the kitchen table. |
How Much Does It Cost to Draft?
Adding a Memorandum of Wishes to your estate plan is a highly cost-effective way to add personalized detail.
- Included in Packages: Many Ontario law firms include the drafting of a Letter of Wishes for free as part of a comprehensive Will and Trust package (which typically ranges from $1,500 to $4,000 CAD).
- Standalone Drafting: If you hire a lawyer solely to review and finalize a complex Memorandum, expect to pay between $500 and $1,000 CAD.
- DIY Updates: Once the initial template is created, you can update it yourself for $0 CAD whenever your family circumstances change.
How Long Does the Process Take?
This is one of the fastest components of the estate planning process.
- Brainstorming: Taking the time to reflect on your family values usually takes clients a few days of careful thought.
- Lawyer Review: A lawyer can typically draft, review, and finalize the document within 1 to 2 weeks.
- Execution: Signing the document takes only a few minutes. It goes into effect immediately upon your death or incapacitation, exactly when the trustee takes over.
Frequently Asked Questions (FAQ)
What happens if the trustee completely ignores my Memorandum?
Because the document is legally non-binding, the trustee has the absolute right to deviate from your wishes if they believe it is in the best interest of the beneficiaries. This is why choosing a highly trustworthy executor or corporate trustee is the most important decision you make.
Do the beneficiaries have a right to see the letter?
Generally, no. In Ontario, unless the Trust Deed specifically orders it, a Memorandum of Wishes is considered a private, confidential communication between you and the trustee. The beneficiaries do not automatically have a legal right to demand a copy.
Can I use the Memorandum to change who gets the money?
No. A Letter of Wishes cannot contradict the main Trust Deed or Will. If your Will says the money is split equally between your two children, you cannot use a Memorandum to tell the trustee to give 100% to just one child.
Can I update the letter without calling my lawyer?
Yes! One of the biggest advantages is that you can rewrite the letter at home, sign it, date it, and replace the old copy in your safe. However, having a lawyer quickly review it ensures you haven’t accidentally written anything legally contradictory.
Should I explain why I am disinheriting someone in the letter?
It is often very useful. If you exclude a child from the trust, placing a polite, factual explanation in the Memorandum of Wishes can help defend your estate if that child later attempts to challenge the Will in the Superior Court of Justice.
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