An estate consists of a person’s property, such as their personal items, bank accounts, real estate, stocks and securities, and other various assets. When the estate’s owner dies, their estate plan determines how their property is to be managed and distributed. A clear estate plan can minimize the tax burden placed on loved ones, as well as the need for probate proceedings.
Most people associate estate planning with wills and trusts. A will is a legal document, either written or oral, that states how a person wishes their property to be disposed of when they die. The will lists the assets and who is to receive each asset; the recipients are known as beneficiaries. A trust is also created by the owner of property, who designates a trustee to hold legal title to the property and distribute the trust assets.
An estate plan may also address additional issues. Some specific examples include:
- How the testator (estate owner) is to receive medical treatment;
- Organ donor status;
- Who is to make legal and financial decisions on behalf of the testator, should they become incapactitated;
- Who is to care for the testator’s minor children;
- Who is to take over the testator’s business interests; and
- Any funeral arrangements and specifications.
What Is a Conditional Gift?
The term “conditional gift” refers to a provision in a will. This provision states that money or property is to be distributed from the estate only when and if a specific event takes place. An example of this would be if the testator leaves a sum of money to each of their grandchildren, but those grandchildren will only receive that money if they graduate from college before turning 25 years old.
There are two basic conditions that can be put on gifts in wills:
- Condition Precedent: A condition precedent is a condition that must occur before any gift is made. The example given above is an example of a condition precedent, because the beneficiary must graduate college within a certain amount of time before they can receive the money set aside for them.
- Such a condition should be written in a specific way in order to give the condition a reasonable chance of being followed. The condition should set a specific time window that closes after a reasonable period. If the condition is completely open-ended, it becomes increasingly difficult to enforce as time goes on; and
- Condition Subsequent: A condition subsequent applies to gifts which are given without condition. However, these gifts are revoked if a specific event happens. An example of this would be if a testator leaves land to a specific beneficiary, on the condition that the beneficiary may never sell alcohol on that property.
- Such conditions are typically more difficult to enforce, due to the fact that they are completely open-ended. The condition that results in the revocation of the property may not happen until decades after the gift has been made.
It is important to note that there are certain conditions that will never be enforced by a court. Any condition that requires illegal activities is unenforceable. Additionally, any condition that requires a beneficiary to marry or divorce a specific person will not be enforced. Finally, a condition that requires a beneficiary to change their religion will not be enforced either.
Are There Any Limitations to a Will?
Although a well-written and legally valid will is essential to an effective estate plan, they do have some limitations. An example of this would be that wills cannot give away property that the testator does not actually own, and property cannot be transferred to pets. Modifying a will requires being specific about which parts of the actual document are being modified, and if the testator wishes to have the entire will modified, the previous will is considered to be revoked or canceled.
Wills can only be challenged, or contested, by a person who has legal standing to do so. This would be an interested party, or, a person who has something to gain or inherit from the will. A will may be contested for the following reasons:
- The testator was not mentally competent when creating the will;
- The testator was under duress or coerced by someone to agree to the terms of the will;
- As previously mentioned, the testator has another will that overrides the original; and
- The will was not properly witnessed or signed in accordance with state requirements.
Do I Need an Attorney for Conditional Gifts in Wills?
If you are planning your estate and wish to insert a conditional gift, you should consult with a skilled and knowledgeable estate attorney. An experienced estate attorney can help you understand your state’s specific laws regarding conditional gifts, as well as advise you on acceptable and enforceable conditions.
If you are the recipient of a conditional gift through a will,an attorney can help you determine whether the condition is enforceable and how to best proceed. In either case, an attorney can also represent you in court as needed.