Conditional Gifts in Wills

Conditional gifts in Wills

Many of us include gifts in our Will that are subject to a specific condition being fulfilled. The most common example of conditional gifts in Wills are gifts to children or grandchildren, conditional upon them reaching a certain age. Such ‘contingent’ gifts are almost always made with good intentions. However, sometimes a condition is set to retain some degree of ongoing control over a beneficiary or a situation. This is often referred to as ‘dead hand control’.

Condition precedent vs condition subsequent

There are two types of conditional (or contingent) gifts. A gift to a child upon reaching a specific age is an example of a condition precedent. It means something must happen (the child reaching a certain age) before the gift takes effect. Conversely, a condition subsequent is where the recipient initially receives the gift but loses it if they fail to meet the condition later on. An example of this is a gift to a spouse or partner that becomes invalid if they subsequently marry or remarry.

However, you should always exercise considerable caution and seek legal advice before including a contingent gift in your Will. Not only can a contingent gift sometimes add real complexity to a Will, but the gift – or the condition attached to it – can fail in certain circumstances.

When will a conditional gift fail?

The most common reason conditional gifts fail is due to uncertainty, so great precision is needed in the wording of the condition. In the well-known legal case of Re Allen (1953), gifts were made to grandchildren on the condition that they marry a “person of Jewish race”. This was deemed invalid because it was impossible to determine whether a particular person met the specified condition.

A gift or the condition attached to it can also fail if the condition is:

• impossible to perform;
• against public policy or illegal; or
• in conflict or incompatible with the gift to the beneficiary or other gifts or provisions in the will.

Conditional Gifts in Wills: ‘In terrorem’ clauses

Careful wording is also necessary if the testator wishes to impose a condition on a beneficiary that the gift becomes void if they challenge the Will (known as ‘in terrorem’ clauses).

Conditional gifts increase the likelihood of a challenge to the Will, which can be costly. Additionally, conditions precedent often result in the creation of one or more trusts upon the testator’s death. These must be administered in accordance with trust law until the beneficiary has fulfilled the condition attached to the gift.