Loosening the “Dead Hand”: Conditions on Gifts in Wills - LawNow Magazine

Loosening the “Dead Hand”: Conditions on Gifts in Wills

One of the most well-known (if creepy-sounding) metaphors in estates law is the “dead hand”—an attempt by the deceased to continue to control their property after they have died. Estate planning can be difficult, as it can make people face questions that require them to envision themselves as no longer being part of their loved ones’ lives. Perhaps understandably, it can sometimes be difficult for some people to accept that their influence over their loved ones, and over their hard-earned property, might come to an end.

There are times when some continued control is appropriate and useful. For example, a parent might want to set up a trust in her will for her minor children. Often, a parent setting up such a trust will want to delay large payments of money until after the child reaches the age of majority so that the child does not receive a large windfall while he is still relatively young. A parent may hold off on the final payment until the child is in his twenties or thirties. It is also typical to allow the trustee to make smaller payments in the interim, and perhaps to set restrictions on those, such as limiting them to payments for health, education, and support.

Requiring your child to leave their spouse, who you never liked, before receiving their inheritance will be void for public policy for interfering with a marriage. However, there are other times that the type of control the testator, the person making the will, wants to apply is more problematic. The testator might want to insert a condition on a gift: that the beneficiary (the person receiving the gift) will only receive it if he acts in a certain way, or conversely that the beneficiary will not receive it if he acts in a certain way. Drafting a will that contains such conditions on gifts can be tricky, as sometimes the law will intervene to loosen the grip of the “dead hand” and find such clauses to be ineffective.

Public Policy

Conditions can be found to be void for public policy reasons. These are conditions that the courts will not enforce because doing so would so be contrary to public values that there could be some social harm in allowing those conditions to be enforced. However, there are limits to the extent to which the courts will apply public policy considerations to private testamentary dispositions, which are gifts of property made in a will. Such circumstances are rare, as such intervention is always balanced against the equally important principle of testamentary freedom and the ability of a property owner to deal with that property in the will as he or she sees fit.

Even though courts strive to protect testamentary freedom, some conditions will fall clearly outside of social values. For example, conditions that would require someone to commit a crime before being entitled to an inheritance will be unenforceable, and the beneficiary would simply receive the gift as though there were no condition. Requiring your child to leave their spouse, who you never liked, before receiving their inheritance will be void for public policy for interfering with a marriage. Similarly, a clause trying to prevent someone from entering into a marriage would be void as well.

If the gift is being left for a public purpose, like funding a scholarship at a university, then conditions on who can benefit from the gift will also be viewed through a public policy lens, although each would be determined on a case-by-case basis. Scholarships frequently have guidelines for who can be chosen as a recipient, and the donor often chooses some of his or her own personal characteristics: perhaps that the winner should be from the same province, or should be a female. However, if the conditions on who can receive the scholarship are clearly set up to be discriminatory, such as a requirement that it cannot be awarded to someone of a certain race or sexual orientation, those conditions are very likely to be found to be void for public policy.

Conditions Subsequent

Another time that a condition on a testamentary gift might not be enforced is if it is a “condition subsequent”—a condition that is sought to be imposed after the gift is already received. This is in contrast to a “condition precedent”, which is a condition that must be fulfilled before the gift is received. If the testator leaves someone a gift absolutely, rather than putting it into a trust, but then tries to impose terms upon what the beneficiary is to do with the gift after they receive it, those terms won’t be enforceable.

For example, suppose the testator makes the following gift to a child who has shown a tendency for get-rich-quick schemes: “I leave $100,000.00 to my son, provided that this money is to be invested conservatively by him.” The latter term would not be enforceable as a “condition subsequent”, and would serve as no more than a recommendation or preference expressed by the testator. (It is also likely to be found to be too uncertain to enforce, as “investing conservatively” surely means something different to the son than it did to the testator.)

In Terrorem

Another clause that is often asked about is a “no contest” clause. Sometimes, the testator might want to include a clause to the effect of, “If you challenge this will in any way, you will be disinherited.” For example, if the testator has one child who is estranged and intends to treat that child differently than her siblings, then the testator might also be interested in including a clause like this to prevent the estranged child from bringing a will challenge that would be costly and emotionally draining for the other siblings.

One of the most well-known (if creepy-sounding) metaphors in estates law is the “dead hand”—an attempt by the deceased to continue to control their property after they have died. A clause like that invokes the in terrorem doctrine: if a threat is imposed for the purpose of preventing the beneficiary from challenging the will, and is otherwise an “idle” threat, then the clause is treated as being void for public policy. The simple clause that a beneficiary receives nothing if he challenges the will would be considered an “idle” threat, as it is simply inserted to prevent the will challenge, and a breach of the condition would forfeit the challenger’s inheritance.

However, the law has developed such that a similar clause that is not “idle” could be enforceable. Inserting a gift-over to specify how the property will be disposed of will prevent the threat from being merely “idle”. A gift-over specifies who else would receive that property, if the first person named as a beneficiary does not receive it. The reason that inserting a gift-over is seen to make a difference is because it elevates the threat from being “idle” and inserted just to coerce the beneficiary to act in a certain way, to being a condition that also possibly fixes a benefit on another person.

Even if a “no contest” clause contains a gift over, it can still be found to be void for public policy. Such a clause cannot try to oust the jurisdiction of the courts entirely, or it would be found to be void. The testator cannot prevent a challenge to the validity of the will for reasons such as undue influence, or prevent interpretive assistance where the will is genuinely unclear. Further, if the testator has dependants, such as a spouse or minor children, those dependants have a right under the Wills and Succession Act to bring a claim for support if they are not adequately provided for under the will. Let’s say that the testator leaves his second wife $10,000.00, divides the rest of his sizeable estate between his adult children, and seeks to preclude his wife from challenging this distribution of his assets. Inserting a “no contest” clause, even if otherwise well-drafted, would not be enforceable to prevent a claim by the wife for support under the dependant relief regime, as it is against public policy to allow someone to avoid their support obligations (indeed, the very reason dependent relief legislation is there is in case a testator tries to avoid those obligations).

All of which is to say, if a testator would like to include a “no contest” clause, it will take some careful consideration as to whether such a clause could address the testator’s concern, and even if it could, some careful drafting to ensure that it is not found to be void.

Conclusion

The law favours giving people testamentary freedom, and thus generally allowing people to do what they want in their wills. In a properly drafted will, the testator’s concerns and desires can usually be carried out properly and reasonably, such as through a carefully drafted clause or through a trust. However, where the testator’s wishes are clearly contrary to public policy and would not be enforceable for the reasons outlined above, the court will find limits on their ability to try to exercise control after they are gone. For anyone wanting to insert restrictions on a gift in a will, it is important to seek advice about how that might be done. Otherwise, the actual legacy of their “dead hand” may be expensive court applications that find their wishes unenforceable.

Authors:

Mandy England
Mandy England LLB, is an associate at Dentons Canada LLP in Edmonton, whose practice focuses on trusts, wills and estates.
 


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