Conditional Bequests (Qld)
In Queensland, a testator has the freedom to draft their will in any way they choose, to select beneficiaries and make bequests in any amount and form that they deem appropriate. On occasion, a testator may choose to create a conditional bequest, where the beneficiary must meet certain prerequisites before they can inherit the gift. If the beneficiary fails to meet the conditions imposed in the will, they will not receive the gift. The use of conditional bequests can grant a testator more control over their deceased estate and can even dictate the behaviour of beneficiaries after the testator’s death. There are, however, inherent problems with attaching conditions to a gift. This article outlines the purpose of conditional bequests and highlights the importance of drafting a clause to be legally enforceable.
Definition Of A Conditional Bequest
A conditional bequest is a clause in a will that bequeaths an asset to someone but only when certain conditions are satisfied. A conditional bequest may be condition precedent or condition subsequent.
With a condition precedent, a beneficiary must meet certain conditions in order to inherit the gift. This can be used to incentivise a beneficiary to behave in ways that conform to the testator’s values. For instance, a will might specify that a child only receive a gift when they finish their tertiary education. By contrast, under a condition subsequent, the beneficiary will immediately receive the bequest, but will only retain it if they continue to comply with the conditions of the gift. This type of conditional bequest is almost impossible to enforce unless the asset is held in trust. For example, if a testator leaves funds to their child on the condition that the child invests the money conservatively, the terms of the bequest would only be regarded as a recommendation as it is otherwise unenforceable.
Attaching a Condition To A Bequest
A testator should consult a solicitor in order to ensure that a conditional bequest is drafted in a way to avoid misunderstanding, ambiguity or challenge. If the terminology of the conditional clause is not carefully considered, the meaning may not accord with the testator’s true wishes.
Should A Testator Make Conditional Bequests?
There is no doubt that a conditional bequest can grant a testator a measure of posthumous power over their assets and their beneficiary’s behaviour. However, a testator should think carefully before making such a bequest, as the Supreme Court will not uphold any conditional bequest that is against public policy. In addition, there is no way of knowing what the future holds for a beneficiary, and making a gift under narrow circumstances may impose on the beneficiary in an unforeseen way. For example, if a testator makes a conditional bequest that a grandchild only receives an asset upon completion of a particular course of study, then there is no recourse if the grandchild has to leave university due to ill health.
Rather than making a conditional bequest, a testator might choose instead to establish a discretionary testamentary trust in their will. This type of trust empowers a trustee to administrate the trust as they see fit in the spirit of the testator’s wishes but also allows for the trustee to respond to the beneficiary’s changing circumstances. The experienced wills and estates solicitors at Armstrong Legal can advise on the best approach to estate planning given the particular circumstances.
Is A Conditional Bequest Binding?
The court is loath to overturn a testator’s last wishes, so it will uphold a conditional bequest unless it violates the rule of law, is uncertain or impossible to satisfy, or is contrary to public policy (that is, the principles upon which laws are based).
Certainly, a condition subsequent bequest may not be binding if it conflicts with another law. For example, if a testator leaves a house to someone in his or her will on the condition that the property is not sold, this is difficult to enforce, as there is no legal impediment to a property owner selling their own asset.
A court is unlikely to uphold a bequest that relies on a beneficiary divorcing their spouse, as such a condition is fundamentally contrary to public policy. Similarly, a condition that a beneficiary would only receive a gift if they did not make a further claim against the deceased estate would be invalid because a beneficiary is entitled to make a Family Provision Application. Such a bequest is contrary to public policy and law as there is a community interest in ensuring that people in need receive adequate support from their families.
In addition, the court may overturn a conditional bequest if the beneficiary literally cannot complete the requirement in the specified time limit, but it will be up to the beneficiary to prove that the condition is impossible, and not merely difficult, to fulfil. Fundamentally, the condition of the bequest must be possible, legal and not injurious to any party.
The wills and estates solicitors at Armstrong Legal can guide you through making a legally binding conditional bequest, or help you dispute an unfair conditional bequest. Please contact or call our team on 1300 038 223 today for experienced and friendly legal assistance.