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10/25/12 It's The Law: Reach From The Grave - Conditional Bequests

Question:

Can I make a gift in my will that is conditioned on action or inaction by the beneficiary? I am thinking about leaving my grandchildren some money, but want to encourage them to good behavior.

Answer:

There are not a lot of appellate decisions in Florida addressing this issue, which leads to the conclusion that Florida courts generally enforce conditions on testamentary bequests. In fact, that is the general rule throughout the United States. Only when the conditions are violative of public policy or too unclear to determine intent of the decedent are such conditions rejected. A court's efforts in this case are to carry out the decedent's intent.

Wills frequently contain gifts which are conditional on achievement of some acceptable goal of the beneficiary. Examples include attendance at school, refraining from smoking and other behavior modification. In effect, the decedent is reaching back from the grave trying to control behavior of the living. Courts opine that since it is the decedent's money, the decedent can place conditions on receipt of the money by a beneficiary, no matter how whimsical.

Conditional bequests are made with 2 kinds of conditions. A condition precedent is a condition that must be met before the beneficiary receives the bequest. A simple example is a gift conditioned on the beneficiary graduating from college. A condition subsequent is a condition which will cause the beneficiary to lose the bequest after it was received. An example might be gift of real estate to a beneficiary conditioned on the beneficiary continuing to use the property as it was used when the decedent died.

In some cases, the condition is that the beneficiary provide some service to the estate or others. These conditions can include continued employment by the decedent until the decedent's death, serving as an accountant to the estate or provision of nursing services to the decedent's wife until the wife dies. Those conditions have been held valid. And, in some cases, even failure to perform does not terminate the gift. Where performance is rendered impossible through no fault of the beneficiary, the courts have often found that the decedent intended the gift to be made anyway since the beneficiary was not at fault. This is particularly true when another beneficiary under the will makes performance impossible, such as where the personal representative refuses to hire the beneficiary as an accountant or fires the nurse who was taking care of the decedent's wife.

In some cases, the decedent attempts to place limits on marriage or remarriage of the beneficiary. Florida courts have stated conditions prohibiting or limiting marriage are not favored. But, at least in the case of the decedent's widow, limitation on remarriage will be enforced. The courts have also enforced conditions restricting a beneficiary's marriage to a member of a particular faith, although limiting enforcement to status of the beneficiary at time the estate is distributed.

In one case, the decedent made a gift of cash and watches conditioned upon the beneficiary making a claim to the cash and watches on the executor of the estate within 8 months of the decedent's death. When the beneficiary did not make a claim until 5 years after the decedent's death, the beneficiary's claim was denied by the court, even though the executor did not make a real heard effort to notify the beneficiary of the gift.

Although Florida courts frequently state that only conditions that are illegal or violative of public policy will not be enforced, I was unable to locate any such decisions which might be pertinent to your situation. The one I did locate was from 1864 and would certainly not be controlling today. In the case of Miller v. Gaskins, the decedent gave 2 slaves to a beneficiary, conditioned on the beneficiary allowing the slaves to "enjoy such privileges and freedom as is consistent with law" and that 1 of the slaves be "bound out to a useful trade until he is 21." The Florida Supreme Court held that bequest void as being in contravention of the policy of the laws prohibiting slaves from going at large or being partially free. The end of slavery certainty ended the relevance of that decision, but it is illustrative of the rare occasion upon which a court will invalidate a condition because it violates public policy.

The most important part of conditional bequests is drafting. Intent of the decedent must be made clear so the court can enforce the condition. The decedent will not be available to explain the gift or condition. This makes it critical that you retain a good attorney to draft your estate planning documents when you intend to place conditions on your bequests.

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