Memorandum Of Wishes Template for New Zealand
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What is a Memorandum Of Wishes?
The Memorandum of Wishes is a crucial document in New Zealand's trust and estate planning landscape, typically accompanying a trust deed or will. While not legally binding, it provides essential guidance to trustees and executors about how the settlor or testator would like their assets managed and distributed. The document is particularly valuable when trustees have discretionary powers, as it helps them understand the reasoning behind the trust's establishment and the settlor's intentions for different beneficiaries. Common scenarios for using a Memorandum of Wishes include providing detailed guidance about education funding, timing of distributions, care for vulnerable beneficiaries, or management of family businesses. The document can be updated as circumstances change, offering flexibility while maintaining clear communication of intentions.
Frequently Asked Questions
Is a Memorandum of Wishes legally binding on trustees in New Zealand?
No, a Memorandum of Wishes is not legally binding in New Zealand under the Trusts Act 2019. However, trustees must consider your wishes when making discretionary decisions about trust assets and beneficiaries. While they're not required to follow your wishes exactly, they must give them proper consideration and have good reasons if they decide to act differently.
Can trustees make decisions without a Memorandum of Wishes in New Zealand?
Yes, trustees can still exercise their discretionary powers under the Trusts Act 2019 without a Memorandum of Wishes. However, without this guidance document, trustees may find it difficult to understand your true intentions for asset distribution and beneficiary care. This can lead to decisions that don't align with what you would have wanted, potentially causing family disputes.
How often should I update my Memorandum of Wishes in New Zealand?
You should review and update your Memorandum of Wishes whenever significant life changes occur, such as births, deaths, marriages, divorces, or major changes in family circumstances. It's also wise to review it every 3-5 years to ensure your wishes still reflect your current intentions. Unlike your trust deed, this document can be updated relatively easily without formal legal amendments.
How is a Memorandum of Wishes different from a Will in New Zealand?
A Memorandum of Wishes provides non-binding guidance for trust assets and ongoing beneficiary care, while a Will is legally binding and deals with estate distribution after death. Your Will operates under the Wills Act 2007, whereas the Memorandum works within the Trusts Act 2019 framework. The Memorandum can cover ongoing family support and relationship dynamics that a Will typically doesn't address.
How long does it take to prepare a Memorandum of Wishes in New Zealand?
A comprehensive Memorandum of Wishes typically takes 2-4 weeks to prepare in New Zealand, including initial consultation, drafting, and revisions. The timeline depends on the complexity of your family situation and trust structure. Most of this time involves careful consideration of your wishes rather than legal formalities, as the document doesn't require court filing or complex legal procedures.
Can I include specific dollar amounts in my Memorandum of Wishes?
While you can include specific amounts, it's generally not recommended in New Zealand Memorandums of Wishes. Fixed amounts can become outdated due to inflation, changing asset values, or family circumstances. Instead, consider expressing your intentions as percentages, priorities, or general principles that allow trustees flexibility to adapt to changing situations while still following your overall intentions.
What mistakes should I avoid when writing a Memorandum of Wishes in New Zealand?
Common mistakes include being too rigid with specific instructions that don't allow for changing circumstances, contradicting your trust deed provisions, and failing to consider tax implications under New Zealand law. Avoid making the document too vague to be useful, or including wishes that could breach trustee duties under the Trusts Act 2019. Also, don't forget to inform your trustees where the document is stored.
About the Memorandum Of Wishes
A Memorandum Of Wishes serves as your personal guidance letter to trustees and executors, explaining how you want your trust assets managed or estate distributed. While not legally binding under New Zealand law, this document provides essential context that helps trustees make informed decisions when exercising their discretionary powers.
When do you need this document?
You need a Memorandum Of Wishes whenever you establish a discretionary trust or create a will with complex beneficiary arrangements. It's particularly valuable when trustees have broad discretionary powers over distributions, timing of payments, or investment decisions. Family trusts often require this guidance to navigate relationships between different generations of beneficiaries. You should also prepare this document when establishing trusts for vulnerable beneficiaries who may need ongoing care, or when family businesses are held within trust structures. The memorandum becomes crucial if you want to specify educational funding priorities, explain your reasoning for unequal distributions, or provide guidance about supporting beneficiaries through different life stages.
Key legal considerations
Under the Trusts Act 2019, trustees must act in accordance with the trust deed and in the best interests of beneficiaries. Your memorandum should align with these legal obligations while providing practical guidance. Include clear statements that the document is non-binding and doesn't override the trust deed or will provisions. Consider how your wishes interact with the Family Protection Act 1955, which protects moral duties to family members regardless of your stated preferences. Be specific about your reasoning for distribution preferences, as this helps trustees defend their decisions if challenged. Avoid creating expectations that could be interpreted as binding promises, and regularly review the memorandum to ensure it reflects current circumstances and legal requirements.
Legal requirements in New Zealand
New Zealand law doesn't mandate specific formatting for Memorandums Of Wishes, but they must clearly state their non-binding nature to avoid legal complications. The document should identify the related trust deed or will, specify the date of creation, and be signed by you as the settlor or testator. Under the Wills Act 2007, if the memorandum relates to estate planning, ensure it doesn't inadvertently create testamentary dispositions that require formal will execution procedures. The Property Law Act 2007 requires consideration of how expressed wishes might affect property rights and interests. Store the document securely with your trust deed or will, and inform trustees and legal advisors of its existence. Regular updates are recommended as family circumstances change, ensuring the guidance remains relevant and legally sound.
GOVERNING LAW
Applicable law
This Memorandum Of Wishes is drafted to comply with New Zealand law. Key legislation includes:
Wills Act 2007: Relevant when the memorandum relates to wishes regarding estate distribution, ensuring alignment with formal will requirements and testamentary dispositions.
Property Law Act 2007: Pertinent for understanding how property rights and interests can be affected by the wishes expressed in the memorandum.
Family Protection Act 1955: Important for considering moral duties to family members and potential claims against the estate, even if just expressing wishes.
Law Reform (Testamentary Promises) Act 1949: Relevant for understanding how promises made during lifetime might affect estate distribution wishes.
Administration Act 1969: Provides framework for estate administration, relevant when memorandum includes wishes about estate management.
Relationship Property Act 1976: Important consideration when expressing wishes about property division, especially regarding relationship property.
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