Conditional Gifts in Wills and Trusts
Get a lawyer's help to put strings on bequests you leave in your will.
It's not uncommon to want to leave conditions on an inheritance—for example, you might want to to leave an adult child money, but only if that child goes through rehab for a substance abuse problem or manages the family business. Can you exert this kind of control from beyond the grave? Probably.
How Wills and Trusts Can Attach Strings to Gifts
Often, it’s easiest to use a trust to leave a gift with strings attached. That way, there’s someone in charge of trust assets (the trustee) who can decide whether or not to release funds, based on the beneficiary’s behavior. For example, if you wanted to reward your niece for pursuing a college education, you could leave money in trust, and use this kind of conditional bequest language: “I leave $10,000 to my niece Mia L. Jackson, provided that she enrolls in a four-year college and attends for at least a full academic year before the age of 22.” The trustee could give out the money (or not) when she turned 22.
With a will, your assets are generally distributed soon after your death. So it's more common for a gift (bequest) to be awarded based on the circumstances at the time of death. For example, you could provide that if your nephew is in college at your death or has already graduated, he inherits a certain amount of money.
General Rules on Conditional Gifts
Courts try to honor a will-maker’s intent as much as they possibly can. They won’t, however, enforce a condition that requires a beneficiary to break the law or one that goes against public policy.
Generally, courts use public policy grounds to invalidate provisions that encourage immoral or harmful acts, or acts that can hurt society in general. For example, courts have refused to enforce conditions requiring a beneficiary to get a divorce. But restrictions on marriage—requiring that a beneficiary wait until a certain age or choose someone from a certain religion—are often upheld.
It can be difficult to predict what a court will decide in a particular case. To get an idea of how these rules play out, here are a few examples of actual lawsuits over conditions that were challenged on public policy grounds.
Keeping the will-maker’s widow out of a nursing home. A Texas man left all of his assets in trust, to be used to care for his widow, Lena, in a “home care environment” until the money ran out. Any money left over at Lena's death would go to three beneficiaries. The will stated that any of those beneficiaries who tried to put the man’s wife in a nursing home and so “defeat my plan to continue home care for my wife before all of the Trust has been used for her care,” would not inherit. After the man died, one of the beneficiaries, Craig, became Lena’s guardian, with legal responsibility to look after her. Eventually, he did have her placed in a nursing home, on her doctor’s recommendation. She died there several months later. The court ruled that Craig, by choosing to place Lena in a nursing facility in violation of the trust’s terms, gave up his right to inherit. (Marion v. Davis, 106 S.W.3d 860 (Tex. App. 2003).)
Not changing a child’s name or legal father. In his will, a man established a trust for his young granddaughter, who was the child of his deceased son. The will specified that if the girl were adopted by another man, and her name changed, before the age of 18, she would not inherit. The grandfather seemed to be looking ahead to the possibility that the girl’s mother (his son’s widow) might remarry, and that the new stepfather would adopt the child--and that’s exactly what happened.
The Tennessee Supreme Court ruled that although its decision meant that “an innocent child” would lose an inheritance, that was clearly what her grandfather had intended. It wasn’t against public policy, the court ruled, to provide that if a child were adopted out, she would no longer inherit from her biological grandfather. (Nat’l. Bank of Commerce v. Greenberg, 31 Beeler 217 (Tenn. 1953).)
Marrying within the faith. An Illinois dentist left money in trust for his grandchildren, with the catch that any of them who had married outside the Jewish faith (or whose non-Jewish spouse did not promptly convert) at the time of his death, or that of his wife if she survived him, would inherit nothing. When the grandmother died, all five grandchildren were married; only one was entitled to inherit under the terms of the trust. The trial court and the state appeals court both ruled that the condition was invalid because it went against public policy. The Illinois Supreme Court, however, reversed. It ruled that the clause didn’t affect the grandchildren’s ongoing behavior; they wouldn’t lose money from any action they took after their grandparents’ death. Instead, the Court ruled, the grandparents had simply made a decision to reward, at the time of their deaths, those grandchildren “whose lives most closely embraced the values” they cherished. (Feinberg v. Feinberg, 235 Ill. 2d 256 (2009).)
Not marrying someone of a certain faith. A man left his daughter money in trust, providing that she get monthly payments until age 32, at which time she would get the remaining amount, but only if “she shall have proved conclusively to my trustee … that she has not embraced, nor become a member of, the Catholic faith nor ever married to a man of such faith.” The daughter married a Catholic and challenged the restriction on her inheritance. The Oregon Supreme Court upheld the bequest, ruling that the conditions might seem “exacting, unkind and unnecessary, but we cannot say they were unlawful.” (U.S. Nat’l. Bank of Portland v. Snodgrass, 202 Or. 530 (1954).)
If You Want to Impose Conditions on a Gift
If you want to leave conditional bequests, take a lesson from these cases. First of all, consult an experienced lawyer to find out what your state's courts have decided about the kind of condition you want to impose. Second, be as specific as you can about the requirements for inheritance. Finally, think again--is this really what you want to do? Talk to family members and consider whether you might accomplish your aims in a way that stirs up less rancor than many conditional bequests do.