From a legal perspective, a conditional gift in a Will comes with strings attached. It’s a gesture that will only come to fruition when, or if, certain conditions have been met, specific events have occurred, or actions have been taken. These types of bequests are not a certainty for the beneficiary, and there can be major consequences for those involved if indeed the conditions attached to a gift are not acted upon in accordance with the terms of a Will.
Here we take a closer look at the practicalities of leaving a conditional gift in a Will, why people would choose to take such action, and what happens in the event that a conditional gift fails.
The different types of condition
It is important to understand the difference between a ‘precedent’ or ‘subsequent’ condition within a Will. In reality, this all comes down to wording.
In essence, a condition precedent is one which dictates that an action, event, or milestone must have been satisfied first in order for the beneficiary to take the gift. The most common example of this would be that a beneficiary reaches a certain age before their inheritance is released to them.
A condition precedent should be written in a specific manner so that there is a reasonable chance of it being followed, and outline a specific timeframe. If the condition is left open-ended, it becomes increasingly difficult to enforce as time passes.
A conditional subsequent, in contrast, would see the beneficiary take the gift upon probate being granted, but have it revoked or taken away if they fail to comply with the attached condition. An example could be that a person will inherit a business, but only if they provide financial support for certain other people. If no provision is made for those individuals, then the gift will default and the business will no longer legally belong to the beneficiary.
As they are completely open-ended, these types of conditions are generally more difficult to enforce. Breeches may not happen until decades after a gift has been made, after which point it can become extremely problematic and complex to revoke it.
Although the difference between ‘precedent’ and ‘subsequent’ is clear in theory, in practice it is usually the Court that must construe the testator’s intention through the wording used.
Where the condition requires that something occurs over a considerable time period, the condition is more likely to be considered subsequent by the Court because of the law’s preference for early execution.
When might a gift fail?
A gift may fail if it has been made subject to a condition which has not been satisfied, or if it is deemed void due to one of the following circumstances:
- Illegal or going against public policy – Conditions that go against public policy should never be performed. Such examples might be:
-
- Inciting a beneficiary to commit a crime
- Demanding that a beneficiary exerts political influence
- Inciting the separation of a husband and wife
- Total or virtual restraints on future marriage (e.g. ‘my son will receive his legacy on the condition that he cannot marry anyone born outside of the UK’)
- Too uncertain to perform – Conditions subsequent are usually expressed with much greater precision than conditions precedent. As such, they are far less likely to fail for uncertainty. However, uncertainty remains the most common grounds for failure. Where there is a condition precedent, ‘certainty’ is satisfied if the condition is sufficiently clear enough to enable the condition to be met. However, the Court retains the right to judge the degree of certainty ‘with some measure of common sense and knowledge, and without excessive astuteness to discover ambiguities’
- Impossible to perform – The case of Watson v National Children’s Home (ii) highlights just how ‘impossibility’ renders a condition void. In this case, the testator had placed a condition that a beneficiary must care for the testator’s pets in order to receive their gift, but the Court deemed this condition to be void due to ‘impossibility’ as the pets had predeceased the testator.
- Threatens the beneficiary – Certain conditions will be void against the beneficiary if they are made as a ‘threat’ to induce them to comply with a condition. This could be a threat to their livelihood, their living or marital situation, or even of alienation from peers, colleagues or family members.
The consequences of failing to satisfy a condition will differ depending on the type of condition involved. If a condition precedent is not met then it will be seen to have failed, with the beneficiary receiving no benefit at all. The gift will then fall into the residue of the Will or pass under the rules of intestacy.
However, with a condition subsequent, the beneficiary will take the gift and only lose it by breaching the condition, often long after the fact. And if a condition subsequent becomes unconditional, the beneficiary cannot be divested of it.
Case Study: A claim for a conditional gift in Will denied by the clock and the Court
The terms of a Will can often be a bone of contention, particularly when unexpected circumstances intervene and where reference to long-standing legislation is needed to resolve the dispute.
The High Court case of Naylor & Another v Barlow & Others provides a classic example of both points. It concerned the question of whether a condition attached to a gift should still apply to substituted beneficiaries in the event of the death of the intended beneficiary. It also considered the validity of the condition where the substituted beneficiaries are unaware of its existence.
John Hine Snr was the owner of a farm. He and his wife, Hilda, had four children – John, Philip, Beryl and Basil. John Snr and Hilda entered into a partnership agreement with John and Philip in relation to the farm in 1981. Sadly, Philip died before both his parents.
John Snr had made a Will in 1980 and he died in 1992. The Will provided that his interest in the farm would pass in three equal shares to Hilda, John and Philip as tenants in common. However, it also contained the condition that the shares passing to John and Philip would be dependent on each of them making a payment of £15,000 to their siblings, Beryl and Basil, within nine months of John Snr’s death. If either son failed to make the payment, then their share would pass equally to Basil and Beryl.
John did not comply with the condition imposed by his father, so his interest subsequently passed to Beryl and Basil. Philip’s widow, Ivy, only became aware of the terms of the Will in 1993, by which time the period specified in the condition had elapsed. The executors’ solicitors advised Ivy that the gift was personal to Philip and had now lapsed. However, Philip and Ivy had two children who contended that they only obtained a copy of the Will after the grant of probate was received in 1995 and it became public.
Referring to the Wills Act 1837, the High Court sought to determine if Philip’s interest should pass to Beryl and Basil, as per the condition, or directly to Hilda. This would depend on whether the gift had failed only partially or completely.
However, Section 33 of the Wills Act states:
“(1) Where:
(a) A will contains a device or bequeath to a child … of the testator, and (b) The intended beneficiary dies before the testator, leaving issue, and (c) Issue of the intended beneficiary are living at the testator’s death, Then unless a contrary intention appears by the will, the devise … shall take effect as a devise … to the issue living at the testator’s death.”
In light of this, the Court found that John Snr’s Will had no contrary intention and therefore the gift to Philip had not lapsed and should ordinarily pass to his children, Judith and Janet. The vital point to then consider was whether the condition contained in the Will should stand when taking into account that Judith and Janet could not comply with it as they were unaware of its existence.
Again referring to Section 33 of the 1837 Act, the Court held that if, as in this case, the testator intends for a gift to be condition subsequent and the Act allows the gift to pass to the beneficiary’s children, then any conditions attached to it should also apply. The Judge stated that John Snr never intended John or Philip to inherit without having made a payment to Beryl and Basil and that this caveat must apply to Judith and Janet too. Furthermore, the Judge held that ignorance of a condition doesn’t make it incapable or impossible to fulfil and, therefore, Philip’s share should pass to Beryl and Basil.
Although the judgement may be regarded as somewhat severe in the circumstances, the Court held that to decide otherwise would be tantamount to re-writing John Snr’s Will and that, in making its ruling, his wishes have been upheld.
That said, a lesson to be taken from this case when drafting a Will is that any timeframe for compliance with a condition attached to a gift should begin from the point that the potential beneficiary becomes aware of it, rather than from the date of the testator’s death.
Conclusion
Putting conditional gifts in a Will can have an adverse effect on those left behind if the conditions are too tough to achieve or timeframes too tight. But in essence, the priority should always be about wording gifts to ensure that the conditions are clear and attainable.
The way a condition is structured will have a huge impact on how it will work in practice, and whether or not it will even be legally sound. As such, specialist legal advice should always be sought to ensure that any conditions will actually be valid in the eyes of the law.
For impartial, expert advice, please contact us here at Buckles for a consultation.
