"Don't be original." Sage advice for estate planners. But sometimes clients insist on pulling us out of our comfort zones, especially when it comes to "doing what's best" for their children long after mom and dad have passed away. I mean, how can you argue with a guy who says the least his children can do is marry within the family faith if they want a piece of the family inheritance? Answer: you can't, nor should you. But don't walk into this minefield unprepared. The unintended consequences can include years of divisive litigation, as one family learned in a case the LA Times reported on in Jewish disinheritance upheld by Illinois high court [click here].
On the flip side of this issue, if you're a probate litigator you'll want to spot the potential traps lurking under will or trust clauses seeking to "incentivize" heirs to live a certain way, marry or not marry certain people, complete a certain degree, enter a certain profession, abstain from certain self-destructive conduct, etc. Generally speaking, you'll find these directives in incentive trusts, and they've probably been around in one form or another for as long as people have been writing wills.
Here's the rub. Clients don't want to pay a fortune for the legal research needed simply to understand what kind of minefield they're stepping into with these clauses, let alone how to successfully navigate through it. For that kind of basic research you'll want to read Prof. Gerry Beyer's article entitled Manipulating the Conduct of Beneficiaries with Conditional Gifts. Although Prof. Beyer writes for a Texas audience, the legal principles are widely applicable and just as useful for busy Florida lawyers. Here's an excerpt:
Some conditions are relatively benign such as a provision requiring property to be held in trust until the beneficiary reaches a specified age. However, testators and settlors may use conditions to control or influence nuances of the beneficiary’s behavior. For example, a testator left his house and $30,000 to his wife on the condition that she smoke five cigarettes per day for the rest of her life to get even for her distain of his practice. See Widow Fumes at Order to Start Smoking, SAN ANTONIO EXPRESS-NEWS Sept. 10, 1993, at 6A. Will the court force a beneficiary to engage in a dangerous habit to receive the property? If not, would the wife get the property free of the condition or would the property pass under other provisions of the testator’s will? What about a will provision providing $500 per month for the police officer who gives the most traffic tickets to motorists for double-parking? Dead Man Had Will, Way to Get Double-Parkers, WASH. POST, Aug. 25, 1998, at A2. This month’s article explores conditional gifts and focuses on how to increase the likelihood that the court will enforce the conditions.
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Conditional bequests may be an effective way to carry out a testator’s or settlor’s intent. Courts uphold a wide array of conditions as long as they are phrased appropriately, not contrary to public policy, and not illegal. . . . . Whether to provide incentive for accomplishment, motivation for achievement, protection for the naive, or revenge from the grave, well-drafted conditional gifts may survive to do the bidding of the dead.
Below is a list of the types of clauses Prof. Beyer covers in his article, which includes all the usual suspects.
Restraints on Marriage:
- Restraints on First Marriage
- Restraint on Marriage Before a Certain Age
- Restraints Requiring Consent by a Designee
- Conditions Requiring a Beneficiary to Become Married
- Conditions Requiring a Beneficiary Remain Married
- Conditions Requiring a Beneficiary Be Married
- Conditions Preventing the Remarriage of Spouse
Conditions Encouraging Divorce or Separation:
- Benefit Conditioned on Divorce of Current Spouse
- Condition Requiring that a Beneficiary’s Spouse be Deceased
Conditions Involving Religion:
- Joining or Adhering to a Particular Faith
- Raising a Child in a Particular Faith
Conditions Involving Behavior:
- Being Drug, Alcohol, or Other Vice Free
- Not Being Involved in Crime
- Acquiring a Certain Level of Education
- Attaining a Certain Age
- Waiving Rights
- Not Placing Surviving Spouse in Nursing Home
Other Personal Conduct:
- Requiring that Beneficiaries Not Communicate with Disinherited Siblings
- Not Joining the Military
- Requiring a Beneficiary to Resume or Maintain a Family Name