What better day than Thanksgiving to talk about all we are thankful for? Better be careful what you wish for however.
Who hasn’t wished at one time or other that the money we leave our loved ones is used in a way that enriches their lives? The problem is that if you aren’t careful with your planning, you not only end up ruling from the grave but if you place too many conditions on your beneficiary, your legacy might just end up being quickly ‘re-gifted’.
For example, consider the long suffering husband who was constantly berated by his wife for smoking. In his estate plan, he left a legacy to her on the condition that she smoke 5 cigarettes every day for the rest of her life. "Widow Fumes at Order to Start Smoking", San Antonio Express News September 10, 1993, at 6A. Perhaps his goal was more about revenge than enrichment but conditional gifts are not as rare as you might think despite this extreme example. The thing to remember if you want to inspire your beneficiaries is that the courts will rarely overrule your bequests unless the condition attempts to thwart public policy or the rule of law. Here’s an interesting dilemma: How would a conditional gift to your son requiring that in order for him to receive his share of your estate he remain married to your daughter-in-law of whom you are fond but your son was not enamored. Would this be upheld by the court? One the one hand, our public policy deems marriage beneficial, but is it lawful to hold your son hostage to an untenable relationship?
The two most common conditions I encourage are those that allow the beneficiary to manage his inheritance at a certain age or to first use the legacy for education. Now these are conditions your beneficiary will likely thank you for.
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Williamsburg, Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Reference: Manipulating the Conduct of Beneficiaries with Conditional Gifts by Gerry W. Beyer, Estate Planning Developments for Texas Professionals, October 2012.