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Ruling Beyond the Grave



How can I control what my beneficiaries do with their inheritance?


Have you ever wondered whether you can say that your children are each given $100,000 but that it must be used for a home deposit? Or whether you can give your children your farm on the condition that it never be sold? These are what is known as ‘conditional bequests’.  Certain ‘goals’ may be achieved in a number of ways; however they can also be found to be void and unacceptable in law.


What is a conditional bequest?

There are two types of conditional bequests.

  1. Condition Precedent – this means that a beneficiary must meet certain conditions so that they may receive whatever is left to them in an estate.

  2. Condition Subsequent – here a beneficiary receives their benefit from the estate, however if something specific happens, this may be revoked.


What options do I have?

Instead of a conditional bequest you might use a testamentary trust so that assets are distributed in accordance with a trust deed. Ultimately the discretion as to the use of assets usually lies with the Trustee.


Another way of ‘having your say’ is to include a wish that beneficiaries use whatever is given to them for a specific purpose. For example:


I give $100,000 to my daughter with the wish that she use this money for her educational purposes.


This may be included in the Will, although it is not binding on the executors nor beneficiaries.


A third option would be to prepare a letter of wishes which is written by you and included with your Will. The letter would be considered by your executors, but it is not binding.


Risk

Placing conditions on gifts may lead to a claim after your death. It may be considered by a court to be overly controlling. The drafting and meaning of the document as well as the intention of the Willmaker would be considered carefully. The court is likely to consider public policy, the ability for these conditions to be carried out and other such factors.


Some examples of conditions which have been found void on public policy grounds are as follows:-

  1. A condition rendering a gift void if the beneficiaries enter into military service[1];

  2. A condition requiring a child to reside with a certain parent[2];

  3. A condition requiring a married couple to separate[3]; and

  4. A condition requiring a person to assume a particular surname[4].


Conclusion

If you have specific views about how your estate is distributed, speak to an experienced lawyer about your succession planning. The wording of your Will is of the utmost importance and must be clear and certain with consideration of the cases and legislation.


Book an appointment today...

(03) 5775 2744 (Mansfield)

(03) 5724 3122 (Alexandra)


This article is general in nature. It does not constitute legal advice and should not be taken as such.

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[1] Re Beard [1908] 1 Ch 383

[2] Re Sandbrook  [1912] 2 Ch 471

[3] Re Caborne  [1943] Ch 224

[4] Littras v Littras  [1995] 2 VR 283; BC9503310

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