One of the most common goals people have when creating an estate plan is to leave gifts of money or property to loved ones, hoping to make a positive impact. Some people, however, try to control or direct their loved ones’ behavior from the grave by placing conditions on their gifts.
For instance, a parent may leave a sum of money to a child with the condition that he or she use it for college. Some restrictions may be reasonable or even meant to further benefit the recipient (e.g., encouraging education), but it is important to know what can happen if there are too many strings attached.
If there are too many restrictions on a gift, the recipient may decide not to accept it. This is what happened when a university rejected a gift from former U.S. Attorney General Janet Reno. According to reports, Reno left a homestead to the university. However, she specified that the university must preserve it in perpetuity. Citing anticipated costs, the university declined the gift.
Setting numerous rules and conditions can also trigger arguments among beneficiaries, which can lead to disputes over terms, fairness and intent. Parties can be angry or resentful, which can result in a complicated probate process.
Placing restrictions on gifts in an attempt to control the future can ultimately make a gift burdensome. For instance, earmarking money only for certain types of medical care can be problematic if that care becomes unavailable, unnecessary or contrary to a person’s best interests.
In each of these situations, the recipients and other parties can be left with lengthy (and costly) legal battles, hurt feelings and stress. As such, it can be wise to discuss conditional gifts and specific restrictions with an attorney as well as potential recipients to examine how and if to place restrictions on gifts.