Limits on Memorandum of Wishes for Trusts

May 17, 2017

in Trusts

The Court of Appeal has recently given some directions which are helpful for trustees and beneficiaries to have more clarity with regard to Memoranda of Wishes which are often prepared for settlors and trustees.

The Court has made it very clear that settlors are entitled to express their wishes for the benefit of trustees and trustees are entitled to take them into account, however, trustees must conscientiously apply their independent discretion in the exercise of their powers under the trust.

The Court went on to say that wishes can only be taken into account if they are not inconsistent with the purposes of the trust as they appear from the written terms of the trust document.

Trustees cannot blindly obey all settlor instructions and it is necessary for the trustees to read and understand the Memorandum of Wishes to discern the settlor’s intentions and then to make an objective and independent assessment before deciding the appropriate course of action. They cannot just take into account the Memoranda, all relevant factors must be considered.

The Courts have been consistent with this approach but the recent decision has made it clear that in these situations especially when there is a conflict of interest between various beneficiaries the trustees discretion cannot be limited or hampered by the Memorandum of Wishes especially if they do not clearly follow the terms of the trust.

Trustees should therefore be mindful of their legal obligations and the unfettered requirements in respect of their discretions and carefully consider the settlors intentions and the Memorandum of Wishes. Trustees should take advice in any situation where there is potential conflict between beneficiaries which could result in trustees facing scrutiny through the Courts in those situations.

If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:

Michael Nidd
03 477 8870


The information contained in this publication is intended as a guide only. It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain. 

Previous post:

Next post: