Conditional gifts in Wills are relatively common. However, they can create problems, particularly if they are not worded very carefully.Contact our Lifetime Planning and Wills Team on 01225 755656. Alternatively, complete the Contact Form at the foot of this page. |
Many of us make one or more gifts in our Will that are subject to a certain condition being satisfied. The most common example of conditional gifts in Wills are gifts to children or grandchildren, conditional upon them reaching a certain age. Such ‘contingent’ gifts are almost always made with the best of intentions. Sometimes, however, a condition is imposed to maintain some degree of ongoing control over a beneficiary or a situation. This is often referred to as ‘dead hand control’.
Condition precedent vs condition subsequent
There are two types of conditional (or contingent) gifts. A gift to a child upon reaching a certain age is an example of a condition precedent, ie something must happen (the child reaching a certain age) before the gift takes effect. On the other hand, a condition subsequent is where the beneficiary initially receives the gift but loses it if they subsequently fail to satisfy the condition. An example of this would be a gift to a spouse or partner that fails if they subsequently marry/re-marry.
However, you should always exercise considerable caution and take legal advice before including a contingent gift in your Will. Not only can a contingent gift sometimes add real complexity to a Will, but the gift – or the condition attached to it – can fail in certain circumstances.
When will a conditional gift fail?
The most common reason conditional gifts fail is because of uncertainty, so great precision is required in the wording of the condition. In a well-known case, gifts were made to grandchildren on the condition of them marrying a “person of Jewish race”. This was held to be invalid as it was impossible to say whether a particular person satisfied the condition.
A gift or the condition attached to it can also fail if the condition is:
- impossible to perform.
- against public policy or illegal.
- in conflict or incompatible with the gift to the beneficiary or other gifts or provisions in the will.
Careful wording is also required if the testator wishes to impose a condition on a beneficiary that the gift fails if they challenge the Will (known as ‘in terrorem’ clauses).
Conditional gifts increase the chances of a challenge to the Will, which can prove expensive. Also, conditions precedent often result in the creation of one or more trusts on the testator’s death. These must be administered in accordance with trust law until the beneficiary has satisfied the condition attached to the gift.