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There is no free lunch and for some beneficiaries, there is no free inheritance because a will or trust states that in order to get money or property the beneficiary must do or not do certain things. This may be done with good intentions but practical issues may get in the way.
One example is that of deceased New York City real estate mogul Maurice Laboz, who reportedly left behind a $37 million estate ($20 million of which could go to his two daughters). The New York Post reports that his trust instructs a trustee to give money to his two daughters if certain conditions are met.
- His daughter Marlena, 21, could get $500,000 when she marries, as long as her future husband puts in writing he won’tuse the funds.
- Marlena will see another $750,000 after graduating “from an accredited university” and writes an essay “describing what she intends to do with the funds” with trustees deciding if the essay is good enough.
- She and her sister Victoria, 17, will also get money if they work (and earn three times the income listed on their tax returns), get 3% of their trust annually if they become caretakers for their mother, Ewa, who was married to Laboz, or get the same amount if they stay home and care for their children, but no money will be forthcoming if their children are born out of wedlock.
This approach is known as the “dead hand” in which the deceased tries to use the assets of an estate to control the lives of beneficiaries. You can take this approach but life is complicated. You may want to reward a beneficiary for graduating college, for instance, but if the person:
- Becomes seriously injured or develops a physical or mental condition making that impractical, are they less deserving?
- Decides to make the military a career or start a business instead of attending or completing college, are those choices sufficient to receive the inheritance?
When you create a will or trust you need to balance your desires against the practicalities of administrating your plans, but life is too complex to enable you to foresee all possibilities. Contact us today so we can talk about your goals for your estate plan, who you want to be your beneficiaries and if you think there should be conditions on an inheritance.