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Don’t let a conditional trust become “dead-hand control”

On Behalf of | Sep 27, 2021 | Estate Planning

People with adult or near-adult children sometimes choose to leave assets to them in the form of a trust that places conditions on their receipt of those assets. These are typically referred to as “incentive trusts” or “conditional trusts.” The conditions that beneficiaries are often required to meet are often things like graduating from college, maintaining a job and/or remaining in recovery from alcohol and/or drug addiction. 

The person chosen to be the trustee must ensure that the beneficiary is meeting those requirements before they disburse any assets. Often, the assets are disbursed periodically rather than in a lump sum to further ensure that the conditions are being met.

In most cases, people establish trusts with conditions like those just mentioned to help incentivize their children or grandchildren to stay on a productive path and use the assets they’re privileged to have to better themselves and contribute to the greater good.

What conditions are unenforceable?

Some people, unfortunately, try to use conditional trusts to control their offspring or require them to adhere to values they may not agree with through “dead-hand control,” as it’s sometimes called. That’s why some conditions are not legal and won’t hold up in court if the beneficiary challenges them. 

These unenforceable conditions include:

  • Those involving marriage or divorce – such as requiring a person to marry or stay single, forbidding them from marrying someone of the same sex or another race or religion, requiring them to divorce their spouse or forbidding them from divorcing
  • Those involving religion – such as requiring a beneficiary to follow a particular religion or preventing them from converting to another religion.
  • Anything that’s illegal – such as destroying incriminating evidence or taking and hiding assets so that they can’t be found by those entitled to them

Courts generally will declare that any condition in a trust, will or elsewhere in an estate plan that violates public policy cannot be enforced. Although that’s a broad term, the conditions noted above are the most common examples of unenforceable conditions found in estate plans.

While you have every right to let your children and other family members know what you would like from them after you’re gone, either verbally or in writing, you can’t attach their inheritance to those wishes. The best way to avoid creating a trust with unenforceable conditions is to have experienced legal guidance as you develop your estate plan.