Conditional gifts in a will
When you are writing your will you may want to consider making conditional gifts. Leaving conditional gifts in a will ensures your estate is used by your beneficiaries in a way that you would approve of.
For the best chance of a smooth and stress-free process, it’s important to understand how conditional gifts are made, what types of conditions might be deemed void, and what’s involved in executing the will.
Here, we run through the key things to consider when it comes to conditional gifts (sometimes known as conditional bequests).
Why it's important to write a will
Your will tells everyone what should happen to your money, possessions and property (together known as your 'estate') after you die. Also, writing your will gives you the opportunity to make provisions for the care of your children, who are under 18 at the time of your death.
If you don't leave a will, it means you have died ‘intestate’. When this happens, the intestacy laws will determine how your property is distributed upon your death. This includes any bank accounts, securities, real estate, and other assets you own at the time of your death.
What are conditional gifts?
When you are writing your will you may wish to consider making conditional gifts. Putting conditional gifts in a will means your beneficiaries will only inherit money, assets and belongings from your estate if they meet certain criteria set by you. For example, you can make the gift conditional on the beneficiary reaching a certain age, or specify that funds must be used for school fees or a house deposit rather than everyday spending.
How to ensure your conditional bequests are valid
There are some reasonable restrictions on the kind of conditions you can set on conditional gifts. For example, you can’t make conditional gifts that go against public policy, such as requiring the beneficiary to commit a crime before they can receive their gift or restricting a parent’s access to a child.
Your requests could be deemed void under the following circumstances:
- Your condition is ‘repugnant’, which means it cannot be fulfilled, is not in keeping with other gifts in the will, or is deemed to be contrary to the beneficiary’s interest in the will.
- Your condition is too uncertain and therefore unenforceable. This refers to conditions where the courts would be unable to interpret your request because the wording is unclear, such as asking a beneficiary to ‘stay away from’ a relative.
- Your condition is overruled by a court. A judge can use their discretion and rule that your condition is void if they deem it to be punitive or if they believe the beneficiary is unable to meet the conditions through no fault of their own.
It’s also important that your conditional gifts are clearly stated in your will.
Conditional gifts are often referred to as ‘precedent’ or ‘subsequent’ in nature. A ‘condition precedent’ means the beneficiary inherits the gift upon meeting the stated requirements – such as reaching the specified age – whereas ‘condition subsequent’ means the beneficiary is given the gift but can lose it later in life should they fail to meet the specified condition. Ultimately, the courts will determine whether a beneficiary meets the ‘condition subsequent’ criteria; if they do not, the beneficiary may have to forfeit their gifts.
How do you set conditional gifts?
You can outline your conditional gifts using a discretionary trust, where you appoint trustees to manage decisions about your estate such as whether income or capital is paid out, how often payments are made, and which beneficiaries should receive payment. Your trustees will refer to your letter of wishes – a non-legally binding document that can guide your executors and trustees on your personal wishes, such as which items you are giving away – and allocate gifts accordingly.
Discretionary trusts are often used to support beneficiaries who may require more financial help than others.
Should I set conditional gifts in a will?
Ultimately, whether you choose to impose conditional gifts in a will is a personal decision. For many people, conditional gifts are an attractive way of retaining an element of control over their estate. However, you should ensure your requests are clearly stated in your letter of wishes, which will reduce the chance of a void outcome.
Moreover, a clear and fair-minded approach can also help prevent family disputes further down the line. For your will to be an official legal document in England and Wales, it will need to be made in writing and you will have to be aged 18 or over. You will need to confirm that you have written it voluntarily, are of sound mind, and have signed and dated the will in the presence of two witnesses who must not themselves be beneficiaries. Your witnesses must also sign and date the document while you are present.