{Read in 5 minutes} Control is a very wonderful thing. We all like to be in control of ourselves, our finances, our personal lives, and our futures. However, one of the things that is appealing to many people who choose to write a Will is their ability to potentially control what happens to their assets, even after they’re gone.
When you think about it, that’s what a Will is. Even after you are no longer in control of your own life (because you’re dead!), you are still speaking from beyond the grave to direct who gets what, when, and how.
There are lots of ways that people can do that. The first thing that they can do is make outright bequests of cash, tangible, personal property, or real property directly to the beneficiaries. But, it is possible to go even further. Here are two common ways how:
Leave Money in Trust for the Benefit of Someone
When someone includes a Trust in their Will, they are directing how the Trustee will provide for the beneficiary on an ongoing basis. There are several reasons why someone may want to create a Trust. For example:
– A parent may want to ensure that their minor children do not inherit assets until they are financially mature;
– Perhaps you have someone who is very attached to a pet that they want to ensure will be looked after for a long time; or
– Perhaps they wish to provide for a disabled beneficiary who is enrolled in needs-based government entitlements.
In any of these situations, the client would get to choose not only who is the Trustee managing it, but under what circumstances the beneficiaries receive money — and when or if the beneficiaries ever receive money outright, and how the Trustee can spend money on their behalf.
A Conditional Gift
A conditional gift is something that has conditions established by the deceased, attached to it. The designated recipient or beneficiary must accept the conditions in order to receive the gift.
Sometimes the conditions can be onerous and make the beneficiary state that they don’t want the gift at all. However, there are plenty of times that people might wish to put restrictions on such a gift. For example, suppose I own a famous piece of artwork and I would like to leave it to my favorite museum. It’s important to me that it’s always displayed in my hometown, so I might wish to leave it to the museum on the condition that:
– they never sell the artwork for profit;
– they never loan it out to the collection of another; or
– they never loan it from the collection so that it can be toured at another museum.
In a situation like this, assuming that piece of art in question is significant enough, a museum beneficiary might be willing to jump at a chance like that.
Another common scenario would be if I wanted to leave a scholarship for students at college or university. I could, for example, direct that the funds be used to endow a scholarship for chemistry students studying at the postgraduate level. The school would then accept the funds on the condition that they earmark them for scholarships to such students.
However, it’s important to remember that charitable organizations are great at seeing that people’s wishes are fulfilled and honoring their legacies. But it’s also important to remember that they need to do things like keep the lights on and buy pencils, which require unrestricted funds. Choose wisely.
So, like anything else, advance planning is an important part of any good estate plan. Think about what your goals are and why these goals are important to you. Be sure to discuss it with your attorney when writing a Will or a Trust.
Also, if you have received Letters from the Surrogate’s Court, and they are serving as an Executor or Administrator of an Estate, it’s important that you review the deceased’s wishes carefully to ensure that you can advise the beneficiaries of any potential conditions upon their gifts.
For more information on this topic, please contact me.