Friday, October 11, 2013
Conditional Gifts Under Your Will
Conditional Gifts Under Your Will
Back on track after the Kasner Symposium, I wanted to talk about Conditional Gifts under your Will. You, as the testator of your Will are free to dispose of your property on whatever conditions you choose, provided those conditions are not prohibited by law or violate public policy. While there are no express codes that allow for conditional gifts, this is a long established practice of speaking from your Will and whenever there is an expression of intention by the testator in a Will, that expression should control the legal effect. The court will want the testator’s expressed intent to be given impact, rather than just treat it as meaningless text.
A gift under a Will does not take effect unless the Will clearly expresses the testator’s intention that the gift happens, only upon the satisfaction of a special condition. Thus, unless something happens, the gift under the Will does not happen. If the condition does not happen, then the gift lapses and goes under some other section or directive of the Will. For this reason, you must be sure that this conditional aspect is really desired.
So what are we talking about as being a proper condition? Most common is survival. Simply put, the Will might state that, “my children will each take equally, provided they are alive at the time of my passing”. You are not alive, you don’t get. Questions about heirs, issue and offspring are different, but you can see a simple condition. Another condition might be, “that they attain the ages of 30, 35 and 40, and they will get 1/3 at each such age”. This is a gift that disperses money are various ages. A final easy example might be, “John will get my horses, provided he still has his farm, Green Acres”. In such a case, John stands to inherit some horses, so long as he has a place for them. One could argue that the gift may happen only if he still owns a certain farm known as “Green Acres”, but we will save the discussion of unique hair splitting for another time.
With that said, what is an improper or unenforceable condition? Conditions of a Will are unenforceable if they are deemed to be unlawful or contrary to public policy. Thus, you can’t leave $1,000,000 to your nephew provided he robs a bank, which is against the law. As for policy, believe it or not, the state endorses marriage, so if you were to leave, “the house to my daughter, provided she remains unmarried” would be a violation of public policy and not enforceable. There are numerous cases where the court deals with conditional gifts related to partial use, remarriage, special needs, and the like. If there is any conditional gift, we need to review the language carefully and consider specific case law in order to best advise you.
A conditional gift may seem like a good idea for the testator to control the use and enjoyment of the property they are gifting away. However, when a client wants to try to exercise such control, be very careful. Rather than exercising control, this frequently triggers litigation and if the gift fails it may go away, so that not only does that person receive no gift, but it may go to an alternate person or fall into the residuary of the Will. Before you go through this process, be sure to discuss all desires and contingencies with your Estate Planner and other advisors.
Before wrapping up this week’s Blog, I thought this is a good place to discuss Mandatory or Precatory language in a Will. Sometimes you may feel the need or desire to speak through your Will. Getting in the last word, so to speak, in your Last Will and Testament. Probably not the best idea, but still common enough. Whether those words amount to a condition or not, will depend on the drafting and your intent. If you are making a statement that also carries with it a directive, then the language is mandatory, and thus may be legally enforceable, or if phrased more indirectly, it could be merely precatory, expressing a desire, but creating no actual enforceable directive. Common mandatory requests include things like, “$10,000 to my nephew, provided he cares for my beloved dog”, whereas, a gift that says, $10,000 to my niece, with the hope that she uses this to pay for drug rehab” is merely a “hope” and therefore precatory, and not a conditional gift. Granted, the testator may feel good enough about this last request from the grave carrying more weight than saying the same thing while being alive. Legal importance versus personal satisfaction is another point of discussion between the attorney and the client.
Next time we will talk about ademption, or the cancelation, withdrawal, revocation or failure of a gift. In the meantime, I hope you will review your Estate Plan with you're “A” Team, or at least begin to seek out an Estate Planning Attorney to start this process. Stay tuned for future blogs. However, if you have any questions, feel free to respond below, or if you are interested in learning more about an Estate Plan, Wills, Trusts, Advanced Healthcare Directives, or Divorce, Custody, Visitation, Child Support, Spousal Support, Property Division, Modifications, Remarriage, or Pre-Nuptial Agreements, please contact me at please contact me at firstname.lastname@example.org, or through my other websites, www.fcbegun.com, or www.linkedin.com for Fred Begun.