Letter of Wishes in a Cook Islands Trust

A letter of wishes is a non-binding memorandum from the settlor to the trustee of a Cook Islands trust, describing how the settlor hopes the trustee will use its discretion. The trustee must consider the letter but is not required to follow it. The trust deed is the only document that binds the trustee.

A letter of wishes exists because the trust’s protection depends on trustee independence. A Cook Islands trustee holds broad discretion so that the settlor holds no enforceable control, and a U.S. court cannot force a settlor to do what he has no power to do. The letter is how the settlor’s thinking reaches the trustee without creating control a creditor could attack.

How Does a Letter of Wishes Work in a Cook Islands Trust?

A letter of wishes reaches the trustee as a private side document, usually delivered when the trust is funded and replaced whenever the settlor’s circumstances change. Writing a new letter requires no amendment procedure and no trustee consent. The current letter supersedes earlier ones, and most settlors replace the letter rather than accumulate versions, because conflicting letters from different years slow the trustee down.

Cook Islands trust administration runs on trustee discretion: distributions, investments, and duress responses all sit with the trustee under the trust deed. An offshore trustee is a licensed company whose staff administer trusts full-time, and its fiduciary duty runs to the beneficiaries under the deed, never to the settlor’s preferences. The letter informs how the trustee exercises the powers the deed grants. It adds no new powers and takes none away.

What Do You Put in a Letter of Wishes?

A letter of wishes for a Cook Islands trust typically covers four subjects: distribution philosophy, beneficiary circumstances, contingencies, and family priorities for a duress period.

• Distribution philosophy. How freely the settlor hopes the trustee will distribute, and for what: education funded without hesitation, lifestyle support kept modest, capital preserved for the next generation. The trust deed’s distribution provisions set what the trustee may do; the letter describes how the settlor hopes those powers are used.
• Beneficiary circumstances. Facts the trustee cannot learn from the deed: an adult child who manages money poorly, a beneficiary with special needs, a son-in-law the settlor does not want indirectly enriched. A Cook Islands trustee sits thousands of miles from the family, and the letter is often its only window into the family before it must decide a request.
• Contingencies. What the settlor hopes happens on death, divorce, incapacity, or a beneficiary’s own creditor problems, and who comes first if the trust fund shrinks and cannot support everyone.
• Duress-period priorities. Which family expenses will still need covering if a court order cuts the settlor off: a spouse’s living costs, a child’s tuition, an elderly parent’s care. During duress the trustee suspends distributions to the affected beneficiary but keeps discretion over the rest of the family.

Anything a settlor needs enforced belongs in the trust deed rather than the letter; the letter carries only preferences.

What Is the Difference Between a Trust Deed and a Letter of Wishes?

The trust deed is the binding legal instrument that creates a Cook Islands trust and defines the trustee’s powers; a letter of wishes is informal guidance that binds no one. The two documents divide the work of the trust between them.

	Trust deed	Letter of wishes
Legal force	Binding on the trustee	Guidance the trustee must consider but may decline to follow
How it changes	Formal amendment under the deed’s own procedures	Settlor writes a new letter at any time
What it contains	Powers, beneficiaries, spendthrift and duress clauses	Preferences, family context, priorities
Registered	Registered with the Cook Islands registrar	Held privately by the trustee and the settlor’s attorney

The trust deed carries the operative protections: the trustee’s discretionary powers, the spendthrift provisions, and the duress clause. A settlor who wants a guarantee that a disinherited relative never benefits, or that trust assets never fund a particular venture, needs deed language, because the trustee can lawfully decline anything the letter asks.

Can the Trustee Ignore a Letter of Wishes?

Yes—a Cook Islands trustee can decline to follow a letter of wishes, and its freedom to do so is part of what keeps the trust’s protection intact. The trustee owes the beneficiaries genuine consideration of the letter, and licensed trustee companies follow sensible guidance in ordinary administration because the settlor usually understood his family better than anyone else involved.

Trustee departures from the letter fall into two situations. The first is a request that would harm the beneficiaries or breach the deed, which the trustee refuses no matter what the letter says. The second runs the other way: a trustee that follows the letter mechanically, without independent evaluation, is not exercising discretion at all, and a creditor can argue the trust’s discretionary character is a fiction.

A trustee that brushes aside reasonable guidance without explanation faces its own check. The protector typically holds the power to remove the trustee and appoint a replacement, so a pattern of arbitrary decisions costs the trustee the engagement.

Why a Binding Letter Would Destroy the Protection

A Cook Islands trust protects assets because the settlor cannot compel the trustee to pay. When a U.S. court orders a settlor to repatriate trust assets, the settlor’s defense is impossibility: he can be ordered to ask, but he cannot make the trustee comply. The defense holds only if the settlor genuinely lacks control. The duress clause tells the trustee to refuse any instruction a court forced the settlor to give. Courts jailed the settlors in In re Lawrence and FTC v. Affordable Media because retained control made compliance possible.

A letter of wishes that bound the trustee would hand every judgment creditor the argument that the settlor still controls the trust. The court would order the settlor to write a new letter directing payment, and the impossibility defense would collapse. Non-binding guidance breaks that chain: no matter what the settlor writes, sends, or is ordered to send, the trustee decides.

Cook Islands law itself tolerates far more retained control than good drafting ever uses. The Cook Islands trust statute provides that an international trust is not invalidated because the settlor keeps a power to revoke, to amend, or even to direct the trustee. That tolerance protects the trust’s validity in the Cook Islands.

The statute’s tolerance does nothing to shield the settlor once a U.S. judge gets involved: a settlor who can direct the trustee can be ordered to direct it, and jailed when he refuses. The letter of wishes fills the space between what Cook Islands law permits and what U.S. exposure makes wise: the settlor’s thinking travels to the trustee, and the settlor keeps nothing a court can grab.

Can Creditors See a Letter of Wishes?

A judgment creditor can usually obtain a letter of wishes through post-judgment discovery. Federal procedure and its state counterparts let a creditor with a judgment demand documents and testimony from the debtor, and standard requests reach every document relating to any trust the debtor created. The settlor’s copy is producible, and the letter is not privileged, because it is a communication from the settlor to the trustee rather than a confidential request for legal advice.

The trustee itself sits outside the reach of a U.S. subpoena, but the settlor does not, and the settlor answers deposition questions about the letter under oath either way. The practical assumption behind every well-drafted letter is that a creditor’s lawyer will eventually read it.

What the creditor is reading for is control. Fixed monthly amounts, named payees, and phrasing like “the trustee shall follow my directions” become exhibits in an argument that the trustee is the settlor’s agent and the discretion is staged. A letter that describes hopes and explains reasons gives the creditor nothing: it confirms what the trust deed already says, which is that the decisions belong to the trustee.

A question we hear once a claim arises is whether the old letter can be replaced before anyone requests it. Routine updates are ordinary administration, but rewriting or discarding documents once litigation has started creates a worse problem than any sentence in the letter, because courts punish document destruction far more harshly than they read awkward phrasing.

How to Write a Letter of Wishes That Survives a Courtroom Reading

A well-drafted letter of wishes reads the same to the trustee and to a judge: hopes, context, and priorities, with no sentence that commands. The first drafts we see from business owners tend to read like operating instructions instead, with fixed monthly amounts, named payees, and the standing directions the settlor is used to giving employees. Every one of those sentences would read as control in a creditor’s hands.

Three drafting habits keep the letter useful and safe:

• Express hopes, not orders. “I hope the trustee will give education requests particular weight” guides the trustee as effectively as a command, and reads as guidance in a deposition. Verbs like “direct,” “instruct,” and “require” belong to the deed.
• Explain reasons, not numbers. A trustee gives reasoned guidance more weight than bare figures, and reasons age better. “Support my daughter’s household while her medical practice gets established” still works in five years; “$8,000 per month to my daughter” reads as a standing order and goes stale the year it is written.
• Revisit the letter after major events. A sale of the business, a marriage, a birth, a beneficiary’s divorce. An outdated letter forces the trustee to guess whether the guidance still reflects the settlor’s thinking.

Duress guidance runs in one direction only. The letter may set family priorities for a period when the settlor is cut off, and it may acknowledge that the trustee will refuse the settlor’s own requests during that period. It must never suggest the opposite: a letter promising that the settlor’s requests deserve compliance undercuts the duress clause and hands the creditor an argument that the trustee’s refusal is theater.

The test for every sentence is whether a creditor’s lawyer could read it aloud in a deposition and make it sound like an order. A settlor sharing his thinking protects the trust. An owner giving directions hands the creditor evidence.