The best way to leave behind conditional gifts is with the use of both wills and trusts. In a trust, your designated trustee can make sure the terms of your gift are met before distributing property. You can also leave conditional gifts behind in your will, but the condition must be met at the time of your death, and your instructions may be challenged in court.
What Is a Conditional Gift?
A conditional gift is a gift that only applies if certain conditions are met. You can think about it as a gift with “strings attached.” For example, you can leave behind money that your children will only receive if they go to college or a special gift they will receive upon graduating.
Why Do People Leave Behind Conditional Gifts?
People leave behind conditional gifts to have control over what happens to their money after they die. Many parents leave behind conditional gifts to encourage good behavior in their adult children. Ultimately, people can leave behind conditional gifts for any reason they see fit.
Nevertheless, the court will not enforce a condition that requires someone to break the law or act against the public interest. You can, for example, require your beneficiary to complete drug or alcohol treatment, but you cannot order them to divorce their spouse (because it goes against the public good).
Why Are Trusts Better for Leaving Behind Conditional Gifts Than Wills?
Trusts are more reliable for leaving behind conditional gifts because the trustee’s job is to make sure the conditions of the gift are met. The trustee (and successor trustee) should exist as long as the account and its beneficiaries do, so the condition can be triggered at practically any time in a beneficiary’s life. Trusts also allow you to distribute your gifts over time.
The conditions in wills, on the other hand, are usually evaluated at the time of your death. Courts try to honor a will-maker’s intent as much as possible, but their main concern is distributing your property according to your wishes, as quickly as possible. If you leave behind a gift, the beneficiary will likely receive it in a lump sum.
Even though wills are important legal documents, financial accounts (trusts) and people (trustees) may be more effective in making sure your wishes are met. By explaining your wishes in your will and providing specific instructions to your trustee, you can effectively leave behind conditional gifts.
Start Planning Today
Leaving behind conditional gifts requires careful estate planning, and it’s not just about what happens after you die. If you want to make a conditional gift, you should talk to your beneficiaries while you are still alive. Having these conversations can be difficult, but Nichols Dixon can help.
Let us facilitate the conversation, so we can help make sure everyone understands the conditions of the gift. After we speak with you and your loved ones, we can create legal documents that convey this understanding.
At our firm, we value honesty and integrity and have experience with highly complex cases. We genuinely care about you and your family and want to help honor your final wishes.
As soon as you call us at (405) 294-1511 or send us a message online, we can start creating a personalized strategy to meet your needs, so don’t hesitate to contact us today.
