Should You Place Conditions on Inheritances
When it comes time to write your Will you might have certain specific goals in mind. Some of those goals can outlive your own life. How far you can control from the grave is a subject of regular concern. You might want your granddaughter, Allison, to get married or your son, John, finally to graduate from college. Some goals could be framed in the positive such as attaining certain benchmarks and some in the negative such as avoiding certain behaviors. More often than you might think I have been approached concerning potential Wills to state, for example, who should or should not reside in the family residence after the Will maker dies. On the other hand, when potential beneficiaries have been regular substance abusers the desire of the Testator (Will maker) to incentivize an addict or alcoholic to discontinue such difficult behavior is understandable. In addition to some behaviors being illegal there is the constant threat of loss of the inheritance entirely by unwise purchases and practices. Sometimes a potential competent beneficiary is simply unable to handle funds appropriately and is a spendthrift. In other cases especially for disabled potential beneficiaries a trust might be absolutely necessary in order to protect funds and the disabled person and to attempt to assure an inheritance is held and used effectively to avoid loss of benefits.
Recognizing all of these considerations it is not surprising that responsible Testators play out possibilities to see what results can be obtained. In fact in some cases it would be almost irresponsible not to do this. As might be expected the results vary greatly depending on the type of limitation, the circumstances of the potential beneficiary and the Testator and the goals the Testator wants to accomplish.
A recent online article in Kiplinger, “Is It OK to Rule From the Grave?” https://www.kiplinger.com/retirement/reasonable-estate-plan-conditions by Allison L. Lee, Esq., addresses some of these issues and addresses some circumstances where Will Makers can and probably should act and others where enforcement might be undesirable or difficult to achieve. Here are some ideas contained in that article and others I consider in my practice.
- Minor’s Service and Minor’s Trusts. You obviously cannot appoint your two year old grandson to be Executor of your estate. You also obviously would not want him at that age to be a direct beneficiary under your Will. If a person under the age of 18 is a beneficiary at the time of your death then in all likelihood a guardian would need to be appointed by the Court. Since you would not want your son or daughter-in-law to go through the process and expense of being appointed by the Court you would probably name an adult in the Will to serve as Trustee of a Minor’s Trust until your grandson attained a given age. The age does not have to be the age of majority. You could set it at 18 or also at 22, 25, 30 whatever age you believe appropriate for your beneficiary to inherit directly. During the time that the inheritance is held in trust you would indicate in your Will how the funds are to be used. Often Testators state funds can be used for “health, education, maintenance and support” of the beneficiary which is referred to as a “support trust.” This is common for minor beneficiaries other than those who are disabled and is an understandable limitation on distribution.
- Specific Provisions Regarding Behavior and Attaining Objectives. At the other end of the spectrum are provisions indicating that direct inheritance can be limited based on the behavior of the named beneficiary or attaining certain objectives. Some of these are addressed in the Allison Lee article. Here are examples. “I leave my estate to my granddaughter, Mary, provided she completes college and attains at least a Bachelor Degree.” Mary might go to a trade school, Community College or join the military. The provision is too narrowly written to accomplish the objective. “As long as my spouse does not remarry” is another one. However, consider that if this is an asset distribution issue and not income the distribution would already have been made.
- Is the Provision Enforceable? Consider when drafting whether the provision can even be enforced. In many cases these would have no one to enforce unless there is a trust. Get professional advice from an elder law or estates attorney and think about these issues before acting.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.