I get frustrated when I read some of these trust documents. A person died in 1967 and yet their wishes still control the disposition of real property or money.
I understand that they owned this stuff in 1967, but why do their wishes control today? This person has decomposed and/or has passed on to the afterlife depending upon your religious views.
And some of these restrictions are absurd. The beneficiary can only own the land so long as they don’t consume alcohol or even more absurd, so long as they don’t marry a black person.
I am slowly becoming of the opinion that a testator may devise his property to whomever he or she chooses, but it must be an outright gift. No strings attached. That individual, who is alive in 2018, should be able to use that property however he or she chooses and not have grandma ruling his or her life from the grave.
This seems like a great invitation for someone to explain to me once more, as though I am a sixth grader, the rule against perpetuities and its exceptions. I thought that concept was invented to sometimes prohibit situations like the OP describes, although with exceptions that aren’t clear to me.
If that individual does’t want Grandma ruling his or her life from the grave, they don’t have to accept the property/money. I’m okay with the concept, (except those clearly against public policy, such as “don’t marry a black person.” I think that could be challenged in court like the racial covenants in real estate were).
If I leave $1,000,000 to my daughter, who I believe has an addiction problem, I might want to let her have $1,000 per month “as long as she doesn’t drink and do drugs.” She can do what she wants, of course, but she’s not going to get my money. If I couldn’t do that, I’d just give the million to PETA when I die and my kids can do what they wish.
Oh my. Here is the basic rule against perpetuities: Any contingent transfer must vest, if at all, within a life in being plus 21 years.
So, it is very easy to name your grandchildren as the controlling lives in being. So the property goes first to your children with conditions, then grandchildren with conditions. It is very easy to tie up property, not in perpetuity, but for 75 to 80 years.
I have seen some trusts that use all of the living descendants of John D. Rockefeller I as the controlling lives in being.
I don’t have the case cites handy, but the “don’t marry a black person” clause has been enforced. Courts have ruled that it is against public policy to require a person divorce his or her black spouse as divorce is against public policy.
To your second point, what if the daughter goes to Rational Recovery or that there is some sort of advance in medical science to cure alcoholism? What if she finds that having a drink every second day allows her not to binge? You are going to control her funds for the rest of her life based upon your assessment at the moment you write your will? In your life, you could have a drink and keep your money. Why can’t she?
To say that she can just refuse the $1 million is a non-starter. Nobody would refuse that.
ETA: And the property must vest at some time. Why would you want it to vest with your great-grandson who might give it all away to a Nazi group or something. You at least know your daughter, but not these distant relatives.
One thing trusts can be used for are the care of disabled/special needs people- a trust could be set up with specific restrictions on how the money can only be spent on their care and feeding, and not given to a televangelist, or spent on hundreds of thousands of Beanie Babies or something.
That’s an example of why that kind of thing is GOOD in certain circumstances.
Ultimately a trust is a separate legal entity that is governed by rules set up by the initial trustor. So some puritanical old biddy could say that her trust is for her children and grandchildren who don’t drink alcohol. She’d probably need to define what that means- does that mean habitually? Ever? Not on consecutive Sundays? for it to have any real meaning I’d think.
Because, it’s not her money. It’s my money, that I’ve put in trust to be released as I see fit. I get your point, and I’m saying there aren’t arguments on both sides.
As an aside, my father gave millions of dollars to charity at the end of his life, for the express purpose of not “ruining” his children (and grandchildren) with a large inheritance. We each received a very modest amount (5 figures) in his will. So, I start from the perspective that no one has a right to anything, and if someone wants to transfer funds with strings attached, so be it.
I think if your proposal came about and a person had to chose an outright gift or nothing, a fair number of people wouldn’t do it.
But when the grantor had the money, he or she was free to give it all to a televangelist or buy a bunch of Beanie Babies with it, or buy cases of whiskey. Why should the grantor’s dead hand now say that you can only use the money for these purposes which I, from my grave, believe are positive purposes?
To your second point, she would need to define what “don’t drink alcohol” means. But she didn’t. So everyone gets to pay for lawyers and go to court to let a judge decide if that phrase means never ever or only drinking to excess. Then we argue about what is excessive drinking. All the while that when grandma had the money she was free to drink whiskey for breakfast.
Grandma had her time on this Earth, now she is gone and the kids get to have their time and do good or bad just like all people do.
That was your father’s choice, and my proposal would not hamper that sort of choice.
And I agree that right now it is your money and you can do what you see fit with it. My concern is that once you pass on, why should your wishes, say today in 2018, control into possibly the next century? We all have our appointed time on this Earth. Why shouldn’t each generation have full control over the limited resources available during such times?
Where do you draw the line? Should you be allowed to give any directions at all about the distribution of your estate?
Is for instance this okay? “My estate should be held in trust for my delightful grandson Cleb, until he reaches the age of maturity. His father, my spendrift son Clob, shall only have 100000$ a year, to cover minor expenses.”
What about? “Clob get’s a 30 million. The remaining billion goes to my trusted friend Belch, and I hope he’ll share with my grandson Cleb when the latter reaches age of maturity.”
Or “All my money goes to Fencemakers without borders.”
All of them make decisions about what should happen to the estate after the death of the testator, why are any of them acceptable?
And as always with should, and ought and laws, it might be interesting to look at what laws other countries have. Norway for instance puts certain rights of the heirs (spouse and direct descendants) before the freedom of the testator. Rough translation:
Here’s an example of what seems to me a reasonable trust: I am married to a man who has no interest or ability in learning to handle money. That’s point one. Point two is that I don’t want his relatives to get their hands on a dime of the money that I brought into this relationship.
Therefore, if I die first, there is a trust consisting of my IRA and my share of the house. The trustee will pay the bills (mortgage, utilities) from that trust plus a fixed amount of spending money (he will also have his social security). If my husband dies before the trust is exhausted, the remains of the trust will be given either to charity or to my great-grand nieces and nephews, depending on conditions. Whatever my husband owns when he dies he can do with as he pleases, even if he saves money from his spending money.
So this is a dead hand (mine) controlling what happens to the money I brought into this relationship after I die, such that my husband will be taken care of and his relatives get nothing from me. Would your proposal (OP) allow for this situation?
I don’t have a problem with any of those. Yes, they make decisions about the property after the death of the testator, but there are no conditions on them. If you are a billionaire and want to give your kid $1 billion, $1 million, $10k, or nothing, then I agree with your choice. My objection is that you get a certain amount of money but must spend it only on X, or must not spend any of it on Y, or you only keep the real estate so long as you don’t drink, or smoke, or jerk off too much, or marry a black woman.
The devise should have to be, IMHO, unconditional just as the testator had it. The testator made a choice not to drink or marry a black woman. Fine. The next generation should be free to make his or her own choices about drinking or marrying black women.
You say your husband is bad with handling money. What that means at it base level is that you believe that the choices you make in spending money are superior to that of your husband. And likewise you husband probably believes (or else he would not spend it that way) that his way of spending money is superior to yours.
Now, we could probably take a poll if we saw your budget and maybe 99% of us would agree that you are more responsible with money than your husband. And I have no problem with that.
But, my issue is that once you are dead and gone, why should your wishes continue to control the living? During your life you made the choice to spend wisely and be frugal with your money. Now that you are gone, why does the next person have to spend the money in the exact same way that you did?
Maybe you get satisfaction from having an extra $1,000 in a savings account, but the next person gets satisfaction from spending $1,000 on a night out at the strip club. Again, why should a dead person’s wishes control the living?