When a parent or guardian dies, the expectation is for their heirs to receive the benefit of the deceased’s estate, including properties, family heirlooms, and investment accounts. But there may be strings attached to the inheritance. One or all of the heirs may be required to meet specific criteria to receive their portion of the inheritance.
An experienced estate attorney can help set up trusts and other tools so they require the recipient to meet specific benchmarks before receiving any inheritance. These are called conditional gifts or conditional bequests. These conditions must meet the requirements of related laws and regulations before they can take effect.
How Conditional Gifts Work and How They Are Structured
Parents may decide that a child should not receive an inheritance unless they learn to be responsible with money first, or until they are settled. In these scenarios, the heir might be required to take a financial literacy course or to be married before they can accept any inheritance.
The conditions may be beneficial to the individual heir, but there are legal limits on the requirements and conditions must be appropriately constructed or they will fail when challenged.
For a conditional bequest to be legal, it must:
- Be lawful and not contrary to public policy. For instance, a condition that requires someone to perform an illegal act won’t stand, nor will a requirement for offspring to marry people of the same religious or ethnic background.
- Arbitrary and capricious conditions may be rejected by a court.
- Vague, non-specific, or impossible conditions can be invalidated by a court. That includes things like trying to force a change in a person’s gender identity or sexual preference.
Reasonable conditions that are enforceable include:
- Reaching educational milestones like college graduation or completion of a training program.
- Financial stability, including holding a full-time job for a specified period.
- Attaining a specific age.
- Making specific health choices such as maintaining sobriety.
Illinois-Specific Considerations
If an Illinois resident wants to attach conditions to inheritances, their estate documents (also called instruments) must be valid. That means their will must be made in writing, signed, and witnessed by two adults with no interest in the inheritances.
A written will or trust document, legally executed, is the most effective way to require that heirs meet your requirements before receiving benefits from your estate. However, they may still challenge it in court.
If no will is left, the deceased is considered intestate, so Illinois probate court divides the estate among their spouse and children according to state law, without any conditions attached.
The benefits of leaving a trust include privacy. When a will is probated in Illinois it becomes a public document and its contents, including any conditions for inheritances, may be viewed by anyone. Estate attorneys suggest that trusts which remain private, are better for conditional inheritances because:
- Revocable living trusts allow conditions to be adjusted while the benefactor is alive.
- Creating incentive trusts allows inheritances to be distributed when offspring or heirs meet specific milestones.
- Trustees who manage the trust can make judgements about when the specified milestone is achieved.
Consider as well that comprehensive estate plans often use trusts with “spendthrift clauses” that dole out inheritances over time rather than giving heirs their portion in a lump sum. This provision can be set for one or all of an estate’s heirs.
Making Conditional Inheritances a Reality
If you work with an experienced estate attorney from Legacy & Life Law Firm, they can help you work through any conditions, ensuring that what is recorded is legally defensible, fair, and will work the way it is intended. They will also ask if you have fallback plans in case the conditions aren’t met. Will the assets be given to another person, or will the conditions change? Call for a consultation today.