When people think about estate planning, they usually think about a Will.
After all, a Will determines who receives your assets when you pass away.
However, there is another document that can be just as important in helping your family understand your intentions: a Statement of Wishes.
While not legally binding like a Will, a Statement of Wishes can provide valuable guidance to your executors, trustees and loved ones at what is often a very emotional and stressful time.
What Is a Statement of Wishes?
A Statement of Wishes is a separate document that sits alongside your Will.
Rather than dealing with legal instructions, it explains your personal wishes, reasoning and intentions.
Think of it as a letter to your family and those responsible for administering your estate.
It allows you to explain decisions that may not be obvious from reading the Will itself.
For example:
- Why you have divided assets in a particular way.
- How you would like beneficiaries to use inherited funds.
- Your hopes for the care and education of children or grandchildren.
- Guidance regarding family businesses or family properties.
- Your wishes regarding sentimental items that may not have significant financial value.
Why Is It Important?
One of the most common causes of family disputes is uncertainty.
When beneficiaries do not understand why certain decisions were made, they can sometimes assume unfair treatment or question the intentions of the deceased.
A Statement of Wishes can help reduce this uncertainty.
Imagine two children receiving different amounts from an estate.
Without context, this may create tension.
However, a Statement of Wishes may explain that one child had previously received significant financial assistance during the parent’s lifetime, while the other had not.
The explanation does not remove all disagreements, but it can provide clarity and reduce misunderstandings.
Flexibility Matters
One advantage of a Statement of Wishes is that it can usually be updated more easily than a Will.
A Will is a legal document that generally requires formal execution procedures whenever changes are made.
A Statement of Wishes, on the other hand, can often be updated as circumstances change.
This makes it particularly useful for families with discretionary trusts, family businesses, SMSFs and complex wealth structures.
As family relationships evolve, the guidance provided to future decision-makers can evolve as well.
What Should Be Included?
Every family is different, but common topics include:
- Family values and priorities.
- Education wishes for children and grandchildren.
- Guidance for trustees managing inheritances.
- Succession plans for family businesses.
- Treatment of family heirlooms and sentimental possessions.
- Explanations behind significant estate planning decisions.
Importantly, the document should focus on providing guidance rather than attempting to replace the legal instructions contained in the Will.
The Bottom Line
A Will answers the question: “Who gets what?”
A Statement of Wishes answers the equally important question: “Why?”
While it may not be legally binding, it can provide invaluable guidance to your family, executors and trustees at a time when they may be making difficult decisions on your behalf.
For many families, the greatest legacy is not simply passing on wealth, but passing on wisdom, values and intentions. A well-prepared Statement of Wishes can help ensure that happens.