Everyone wants to believe that the money they leave to their loved ones will be put to good use. Trying to ensure that it does by making your heirs’ inheritance conditional on good behavior or achievement may sound like a good idea, but that sort of estate planning can create all kinds of problems.
Dead Hand Drama
It would be great to know that leaving money to your loved ones will not lead them to a life of purposeless frivolity. You want them to be comfortable, but not lose their drive and passion because they never have to lift a finger to get what they want.
Writing your exact opinion on this subject into your estate planning documents may seem like a simple solution — “if you don’t do x, you will never see a dime” — but it can easily backfire. The courts may invalidate your plan, or it may cause your family members to resent you.
Judges here in Mississippi have not ruled favorably when wills and trusts with “dead hand control” provisions written into them have been challenged in court. From a public policy perspective, it can make extra work for the courts that have to hear disputes over whether conditions are being met or are appropriate at all. In order to keep the plan out of the court system, a judge may invalidate provisions that it considers too burdensome.
Courts can also strike down conditions that are against public policy. For example, Mississippi law prevents people from entering into contracts that impact a person’s love life. So, if a will says a daughter can only inherit money if she refrains from having premarital sex, the courts are not going to enforce that.
Even fairly neutral conditions like those requiring a family member to get a college degree or stay sober before inheriting can cause trouble. Family members who resent being told what to do may cut ties with the family rather than see their lives controlled by a dead person.
Other Options For Incentivizing Good Behavior
If you are determined to place some conditions on your heirs inheriting your money, there is a way to do it without causing dead hand drama. Placing your funds in trust, and giving the trustee the discretion to withhold distributions in certain situations has worked well for many families.
For example, the trustee could be instructed not to support a family member with substance abuse problems who refuses to seek treatment. Funds may also be withheld unless education goals are met, or if a divorce is imminent and transferring funds to a family member would enrich their ex. Setting up a trust is also a good option if your loved one has special needs and would therefore be ill-equipped to manage a large amount of money on his or her own.
Preserving Your Wealth. Protecting Your Loved Ones.
If you have concerns about how your money will be used by your family members after you are gone, working with the experienced estate planning attorneys at Palmer & Slay to set up a trust may be a good option. There are ways to limit how your money can be spent without involving the courts or alienating your family members.