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HCR Law Events

29 March 2022

No ifs or buts: the dangers of conditional gifting

Law firms are reporting a growing trend of will makers seeking to impose strict conditions for their loved ones to receive their inheritance. From requiring money be used for education or towards property purchases, to stipulating that grandchildren must be baptised before inheriting, it seems that parents and grandparents are increasingly keen to exert control and protect their wealth, even after their death.

Soaring property prices, longer lifespans, and a rise in second and third marriages are often cited as factors fuelling the trend. So, are conditional gifts always legally enforceable, and what should you consider before imposing requirements?

If you wish to make a conditional gift, it is imperative to ensure that the conditions can be met. Precise drafting will be essential – ambiguity is likely to lead to disputes. Difficulties can arise with conditions considered to be illegal or immoral, or contrary to public policy.

Ultimately, legal challenges will be costly and will delay winding up the estate.  Experience teaches us that with life’s twists and turns, well intended conditions can often become outdated and problematic.

An alternative option is to include a flexible trust in your will. Your chosen trustees are then granted maximum flexibility to apply money or assets for the benefit of your loved ones in whatever way seems best, taking account of all the relevant circumstances prevailing at the time of your death.

The will is accompanied by a bespoke non-binding letter of guidance, setting out your concerns and objectives. In practice, your trustees would follow the guidance and implement your wishes as far as possible.

If you are happy to place faith in your chosen trustees, the additional flexibility offers greater scope to respond to changes, while the legal discretion placed on them removes the danger of disputes over whether or not particular conditions have been met.

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About the Author
Emma McCarthy, Partner

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