In the case of In the matter of Rabaiotti 1980 Settlement 
JLR 173 it was held that "if trustees slavishly follow a
letter of wishes, their decision can be quashed on the grounds that
it is not, in truth, the decision of the trustee".
In a recent judgment, a trustee requested the Guernsey
Court's blessing to distribute the assets of the trust in
accordance with a letter of wishes in order to limit any future
challenge of the trustee's decision.
The Court considered the following factors as important when
considering whether to approve the decision of the trustee:
The trustee had sought legal
The trustee was aware of the
requirement for it to exercise its own discretion;
The trustee did not rush into making
The trustee met with the
beneficiaries who were receiving the shares that may be considered
unfair and gave them the opportunity to raise any concerns.
The Court emphasised the importance of a trustee making reasoned
decisions and recording those decisions. The Court referred to the
question asked in the case of In the matter of the Mischa
Trust (Guernsey Royal Court, 15/2010), namely "Is the
decision... one which a reasonable trustee properly instructed
could have arrived at?"
The weight to be attached to a letter of wishes will differ
depending on the facts and circumstances of the particular trust in
On the basis of the factors set out above, the Court blessed the
trustee's decision to distribute the trust fund in accordance
with the letter of wishes.
This judgment is a reminder of the importance of trustees acting
independently, taking relevant professional advice and carefully
considering all relevant factors when exercising their powers. If
the trustee has undertaken an autonomous process which involved the
factors set out above, a Court is more likely to support the
trustee in the exercise of its discretionary powers.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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