Reasonable Estate Plan Conditions to Impose

A young mom and dad lie on the bed with their toddler.

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Homework must be done right after school. Multivitamins must be consumed daily. Dinner is family time (translation: put electronics away). These are sensible rules you’ve set for your loved ones that have helped promote health and harmony. So, does it make sense to impose conditions in your estate plan?

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In short, it depends. Read on to learn some of the ways people can effectively set guidelines in their plan to make carrying out their wishes simpler for their loved ones and also some mistakes you’ll want to avoid.

Conditions on Serving as a Representative

Being an executor or a trustee is a big responsibility, so nominating people for these roles is an important decision in planning your estate. Parents commonly name one or more of their children with the expectation that they’ll rise to the occasion.

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That said, it’s also not uncommon for them to include certain conditions on a child’s appointment just to be safe. One of the most common conditions is that a child must attain a certain age before they can assume the role. For example:

I nominate my child, Jane, as my executor; provided they have attained the age of 22. If they have not, then I nominate my sibling, Sally, as my executor, to serve until my child, Jane, attains the age of 22 at which time I nominate my said child.

This is sensible for a number of reasons. First, as a general rule, the law requires that the representatives of your estate be legal adults, which, in many states, means 18 or older. Second, this condition is measurable. Third, it’s practical: Wanting your child to be comfortable handling money makes sense. They will have to make financial decisions when it comes to estate assets and may need to hire an adviser for help.

You could also modify the above condition:

I nominate my child, Jane, as a co-Trustee of the Jane Trust; provided they have attained the age of 22. If they have not, then I nominate my sibling, Sally, as the sole Trustee, to serve until my child, Jane, attains the age of 22 at which time I nominate my said child as a co-Trustee. Thereafter, when my child, Jane, attains the age of 35, I nominate my said child as the sole Trustee of the Jane Trust.

This provision is a bit more complex, but it actually checks off the same boxes: You want your child to ultimately assume control over their trust, but recognize they may need a bit of guidance before they’re fully prepared to handle things on their own. Assuming your child and sibling get along relatively well, your child could learn a lot from a trusted mentor, better preparing them to fly solo.

But what about this one:

I nominate my child, Jane, as my executor; provided that they have completed at least one year of college with above a 3.8 GPA. If not, then I nominate my sibling, Sally, as my executor, to serve until my child, Jane, completes at least one year of college with above a 3.8 GPA at which time I nominate my said child.

Here’s where it starts getting tricky. At first blush, these conditions seem to make sense. After all, you told your child that college is important to their future.

But what if your child decides to attend a trade school or enlist in military service? Or what if your child does attend college, but chooses a competitive school or a difficult major, where attaining high marks is harder to come by? You may have taken your child out of the running for serving an important role in managing your estate.

Conditions on Receiving Property

Many will-makers also want to set ground rules about what purposes estate or trust assets can be used for. What if your impressionable child depletes their trust fund immediately, only to wish they had the funds later in life to help with the down payment on a first house?

For example:

Distributions can be made to my child, Bob, for their health, education, maintenance, and support.

The HEMS standard is actually one of the most common standards for trust distributions. It’s widely considered to be relatively clear, measurable and practical. So when the child beneficiary requests funds for, say, shoulder surgery, the trustee is almost certain to oblige. On the other hand, if they request funds to upgrade their new and expensive vehicle to a more expensive vintage drive, there’s greater assurance this will be subject to scrutiny.

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Some will-makers may want to be extra cautious to ensure funds are there for emergencies. For example:

Distributions can be made to my child, Bob, for their urgent health needs.

Unless your child is independently wealthy, you’re likely to do more harm than good by imposing such a restrictive standard. After all, there are probably a number of purposes your child could use the funds for that you would have supported. Also, what if your child has no urgent health needs for many years? Is it really your intention to leave funds sitting while your child goes through important life milestones, like marriage or the birth of a child, without you contributing to those memories?

Finally, what about a trust with conditions like:

Distributions can be made to my child, Luna, if they graduate from an Ivy League school.

Distributions can be made to my child, Borris, if they secure a job in finance.

Distributions can be made to my child, Katherine, after they have their first child.

You’ve probably guessed it: While graduating from an Ivy League school, securing a job in finance and having children are life events worth celebrating and supporting, your beneficiary may not meet these requirements. What if Luna loves Boston College, Borris wants to be a doctor, or Katy becomes a stepmother to three loving children and decides not to have their own children? Your conditions are likely to then be seen as punishing your beneficiaries for being their authentic selves, rather than supporting them.

Focus on Clear, Measurable, Practical Guidelines

You’ve worked hard to not only acquire property and financial assets, but to guide children or loved ones in smart decision-making. When conditions are complex or overly limiting, it can make settling your estate more time-consuming and expensive and lead to resentment that can take generations to heal.

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Setting clear, measurable and practical guidelines in your estate plan can both protect your plan and your beneficiaries when you’re no longer here.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Allison L. Lee is the Attorney-at-Law, Director Trusts & Estate Content for FreeWill, a mission-based public benefit corporation that partners with nonprofits to provide a simple, intuitive and efficient online self-help platform to create wills and other estate planning documents free of cost. Through its work democratizing access to these tools, FreeWill has helped raise billions for charity. Prior to joining FreeWill, Allison spent more than a decade in private practice.