The ins and outs of conditional gifts

May 25, 2022 | By: Neil Lyons

Have you been the recipient of a conditional gift? Or, perhaps, you’ve considered distributing a conditional gift but aren’t sure what is involved.

Here are some important things to know about conditional gifts.

Conditional gifts can be confusing

A conditional gift usually requires the occurrence of an event before the gift is distributed.

It can be difficult to determine whether a condition has been met. A very common condition of a gift is a requirement that a beneficiary reaches a certain age before the gift is distributed. This is a requirement that is easily determinable.

On the other hand, requiring a beneficiary to be “financially responsible” without any further specifics can cause unnecessary confusion. This confusion can contribute to needless expenses in attorney fees and court costs. Additionally, a court is likely to interpret a testator’s inclusion of a conditional gift in a will as an intent to create a trust for a beneficiary.

What options are available?

First, people looking to draft any will, much less a will with a conditional gift, should be working with a licensed attorney.

Second, people looking to leave a conditional gift in their will should consider executing a trust. A trust enables someone to create a conditional gift that can be managed by a third party of their choice.

This individual is the trustee. A trustee has the authority to take possession of the gift, manage it while it is in the trustee’s possession and distribute it when the condition is met.

A trust is a more efficient way to ensure your conditional gift is distributed in accordance with your wishes and desires.