The letter of wishes is a non-binding statement from the settlor to the trustee.
Background: Trust Letter of Wishes
The letter of wishes is a non-binding statement from the settlor to the trustee, giving guidance on how the assets should be administered and distributed – without legally binding the trustee's discretion.
Because it is non-binding, it preserves the trust's independence, an important point for origin-state attribution (§ 15 AStG). A carefully worded letter aligns the settlor's wishes with the necessary independence.
The Letter of Wishes in Practice
It gives guidance on how the assets should be administered and distributed without legally binding the trustee's discretion, which preserves the trust's independence, important for origin-state attribution. A carefully worded letter aligns wishes with independence.
The non-binding nature is deliberate and important. The CMC team advises on the letter; the deed and reserved acts run through the partner law firm.
Practical Recommendations for Trust Letter of Wishes
Guide, don't bind: Keep the letter non-binding.
Preserve independence: This supports the attribution position.
Word it carefully: Express wishes clearly but flexibly.
Cyprus: Key Facts for Entrepreneurs
A key fact is that the letter of wishes is a non-binding guide to the trustee – deliberately non-binding to preserve the trust's independence for origin-state treatment (§ 15 AStG).
The wider profile: a common-law framework within the EU, no inheritance or gift tax, and strong firewall provisions.
The letter of wishes as a guideline
The letter of wishes is a confidential, legally non-binding document with which the settlor communicates his wishes on the administration and distribution of the assets to the trustee. It supplements the trust deed without restricting its flexibility and gives the trustee orientation in discretionary decisions.
Precisely because it is not binding, the letter of wishes preserves the trust's adaptability to changed circumstances while at the same time documenting the settlor's will. It should be carefully worded and updated where needed. The drafting takes place in interplay with the legal support of the trust.
The Letter of Wishes: The Trust's Informal Compass
The letter of wishes is the settlor's voice beside the deed — the system briefing first: The document is guidance, not law (the settlor's wishes of the expressed sort — the trustee's discretion of the legally-untouched kind: the letter that informs without binding; the compass beside the map), the function is real despite the softness (the discretionary decisions of the guided sort — the beneficiary circumstances of the anticipated kind: the trustee reading the settlor's mind years later; the document that answers questions the deed left open), the pairing with the deed is deliberate (the deed of the binding architecture — the letter of the flexible intention: the two documents doing different jobs; the structure legal and the guidance human), and the honesty formula opens: The letter works because it does not bind — the discretion preserved, the guidance sincere, the trustee free to serve changed circumstances: the softness as the feature; whoever drafts the letter as secret instructions has built a sham's evidence, not a compass. The maintenance note of the standing sort: The letter lives with the family (the updated versions of the changed circumstances — the reviews of the life-event sort: the compass current because revisited).
The cross-reference note: The trust-basics, protection and trustee chapters carry the machinery — this chapter carries the settlor's voice; the library guides without binding.
The Letter in Detail: Contents, Status, Craft
The letter briefing of the guidance world: The contents map the settlor's mind (the distribution philosophies of the expressed sort — the beneficiary priorities of the explained kind: the education, business and hardship scenarios of the anticipated sort; the values behind the structure, written down), the legal status is deliberately soft (the non-binding character of the settled law — the trustee discretion of the preserved kind: the letter considered, never obeyed; the softness that keeps the trust real), the sham line is respected (the guidance of the legitimate sort — the disguised instructions of the dangerous kind: the letter that respects the trustee's genuine role; the drafting that protects the whole structure), the craft is anticipatory (the scenarios of the thought-through sort — the changed circumstances of the addressed kind: the beneficiaries at different ages and stages; the letter written for decades of reading), the confidentiality is practical (the private document of the non-registered sort — the trustee's file of the held kind: the family's philosophy kept close), the updates track the life (the marriages, births and business changes of the revision triggers — the current letter of the maintained sort: the guidance aging with the family, not against it), and the letter formula closes: express the philosophy, preserve the discretion, anticipate the decades, update at life events. The compass formula: Sincere guidance plus preserved discretion equals the working letter — the two-part equation of the settlor's voice.
The drafting note of the professional sort: The letter is crafted with the deed (the paired drafting of the trust mandate — the A. Panayiotou-coordinated documents of the standard sort: the compass and map designed together).
Practice Lines: Writing and Maintaining the Letter
The practice briefing of the settlor world: The philosophy is articulated first (the family's values of the written sort — the purpose behind the settlement: the letter opening with the why), the scenarios are walked deliberately (the beneficiary futures of the imagined kind — the education, hardship and business cases of the addressed sort: the trustee's likely questions pre-answered), the tone stays guidance (the wishes and hopes of the expressed sort — the language that never commands: the discretion visibly respected in every line), the letter is drafted with the deed (the paired documents of the trust mandate — the consistency of the checked kind: the compass agreeing with the map's geography), the reviews are calendared to life (the major events of the revision triggers — the periodic re-reads of the standing sort: the letter current with the family it serves), the trustee relationship carries it (the letter delivered and discussed — the settlor's mind shared while sharable: the document plus the conversations; the guidance human in both forms), and the practice formula closes: open with the why, walk the scenarios, guide without commanding, update with the life. The chapter's memory line: The letter of wishes is the settlor's sincere, non-binding voice — philosophy articulated, scenarios anticipated and discretion preserved; families who write the why, pair it with the deed and update it at life events give their trustees a compass that serves for decades.
The closing classification: The letter of wishes guides trustee discretion without binding it — distribution philosophies, beneficiary priorities and anticipated scenarios, drafted with the deed, kept private and updated at life events. The CMC team coordinates the paired drafting with A. Panayiotou LLC in every trust mandate — the deed is the map, the letter is the compass, and the family's voice survives in both.
Case Study: A Letter Read Nineteen Years Later
The compass story: A trustee's hardest decision was answered by a settlor long gone — the chronicle: The letter had opened with the why (the family philosophy of the first page — "education before comfort, enterprise before idleness, and no beneficiary rescued twice from the same mistake": the values written in the settlor's own cadence), the scenarios had been walked (the beneficiary futures of the anticipated sort — the education, hardship and business cases pre-addressed: the trustee's likely questions answered in advance), the tone had stayed guidance (the wishes of the expressed sort — the discretion visibly respected in every line: the letter that informed without commanding), the updates had tracked the life (the three revisions of the settlor's later years — the marriages and business changes of the incorporated sort: the compass current to his final understanding), the hard question arrived in year nineteen (the beneficiary's second business failure of the request sort — the deed permitting and the trustee doubting: the discretion needing a direction), the letter answered from the past (the no-rescue-twice philosophy of the first page — the enterprise scenarios of the walked kind: "the settlor had answered this exact question before it existed; my discretion stayed mine, but his voice made it wise"), the decision balanced both documents (the partial support of the structured sort — the conditions of the philosophy-consistent kind: the trustee free and guided at once), and the balance closed compassed: written, updated, consulted — the settlor's mind serving two decades after his signature. The trustee's verdict: "The deed told me what I could do; the letter told me what he would have done — I needed both, and only one of them could never have been drafted by a lawyer alone."
The lesson of the compass story: The letter's value compounds across decades — philosophy first, scenarios walked and updates at life events; and the non-binding voice guides precisely because it left the discretion free.
Quick FAQ on the Letter of Wishes
Is the letter legally binding? No — deliberately; it guides trustee discretion without constraining it, and the softness keeps the trust real. What belongs in it? The why — distribution philosophy, beneficiary priorities and anticipated scenarios; the settlor's mind, written for future readers. What must it avoid? Disguised commands — secret instructions turn guidance into sham evidence; the discretion stays visibly respected. Is it registered anywhere? No — the letter is private, held in the trustee's file alongside the deed. When is it updated? At life events — marriages, births, business changes; the compass stays current with the family.
Three Takeaways on the Settlor's Voice
First: Guidance, never command — the non-binding softness is the design, not a weakness. Second: Walk the scenarios — future questions are answered while the settlor can answer them. Third: Update with the life — the letter ages with the family through calendared revisions. Three lines for the compass file.
Glossary of the Letter Chapter
Letter of wishes — the settlor's non-binding guidance beside the deed. Trustee discretion — the preserved freedom the letter informs but never commands. Distribution philosophy — the written why behind the settlement's structure. Scenario walking — the pre-answered future questions of the craft. Revision trigger — the life event that prompts the letter's update. Five terms for the compass file.
Self-Check: Five Questions on Your Letter of Wishes
The compass review: Does the letter open with the family's why? Are the likely scenarios — education, hardship, enterprise — walked in advance? Does every line guide without commanding? Is the letter consistent with the deed it accompanies? And are revision triggers calendared to the family's life? Five yeses: the voice will serve for decades. Every no leaves a question the trustee must guess.
Common Misconceptions About the Letter
Three corrections: "Non-binding means pointless" — the guidance shapes decades of discretion; softness is the working design. "It can secretly command" — disguised instructions endanger the whole trust; the sham line is respected or the structure isn't. "Once written, done" — unrevised letters misguide; the compass is updated at life events. Three lines for the clear letter view.
The One Sentence on the Letter of Wishes
For the index card: The letter of wishes is the settlor's sincere, non-binding compass — philosophy first, scenarios walked, discretion preserved and revisions calendared — pairing with the deed to carry the family's voice across decades. One sentence for the letter file.
Further Reading in the Voice Cluster
The letter chapter branches into the trust library: the trust-basics chapter for the deed it accompanies, the protection chapter for the structure it humanises, the trustee chapters for the discretion it guides, the succession chapters for the generations it serves. The cluster message: The letter chapter is the study of the trust library — the settlor's mind preserved; the library speaks to its future readers.
Afterword: What He Would Have Done
The closing thought: The trustee's division of labour — the deed telling what could be done, the letter telling what the settlor would have done — describes a partnership between two kinds of document that law alone cannot replicate, and the nineteen-year gap in our story shows why both are irreplaceable. The deed is built for permanence: precise, binding, drafted against every contingency its lawyers could price — and therefore necessarily silent on the one thing contingencies actually need, which is judgment. Judgment cannot be codified because it is not a rule but a person: a particular settlor's way of weighing enterprise against comfort, second chances against moral hazard, this child's nature against that one's. The letter preserves exactly this — not decisions, which would bind and thereby break the trust, but the decision-maker: his cadence, his priorities, his pre-answered hypotheticals, available for consultation long after consultation became impossible. What the well-crafted letter achieves is a modest kind of immortality with a legal function: the trustee's discretion remains legally free, as it must, while being humanly accompanied, as it should. And the maintenance discipline — revisions at marriages, births, reversals — keeps the preserved mind current rather than fossilised, so that year nineteen consults the settlor's final understanding, not his first draft. So write the letter as if to a friend holding your family's future, because that is precisely what it is. The deed will give them the power. Give them, also, yourself.
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This article is for general guidance and does not replace individual advice. CMC Certus Management Consultants has advised over 800 clients in Cyprus since 2010 – on company formation, taxes, accounting, Non-Dom, immigration and all related topics. We advise in German, English and Greek.
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