Good, Bad or Indifferent, Restrictions of Trust Distributions Remain Valid!


In an article entitled “The Power of Proper Estate Planning: You Are In Control”, we maintained that how an individual wishes to dispose of their assets is the most important factor when administering an estate or trust.  Recent case law continues to support this principle.

Courts are unanimous in deciding that, “the right to receive property by will is a creature of the law, and is not a natural right” (Shapira v. Union Nat’l Bank, 39 Ohio Misc. 28, 32 (Ohio P. Ct. 1974)).  When people create estate plans, it is ultimately their choice who will receive what.  People can condition their distributions based on achieving certain goals or engaging in certain behavior, i.e., a child will receive a gift of $250,000 so long as they do XYZ behavior.  However, it is more problematic to deny a gift if a child engages in undesirable behavior, i.e., each child gets $250,000 only if he or she divorces their current spouse.  The bottom line is that as long as the restriction is deemed not to be a total ban on any behavior, the courts have overwhelmingly upheld the individual’s wishes.

An example of a distribution restriction is conditioning a distribution to a beneficiary on the fact that they marry within a certain religion.  This is illustrated in a well documented case, Shapira v. Union Nat’l Bank, where the court upheld the individual’s restriction of after death gifts to only those beneficiaries who have married within a specific religion.  The Court recognized an individual’s constitutional right to freedom of religion and further, the fundamental right for persons to marry.  Because of these constitutional rights, courts have invalidated conditional gifts, those that are “total restrictions” on a person’s fundamental or constitutional rights.  However, restricting distributions to beneficiaries who only marry within a particular religion is not a total ban.  That beneficiary is said to be free to marry whomever they want, despite some marriages disqualifying them from the noted gift.  Ultimately, the condition does not impede on their right to marry, but acts as incentive to do so as specified.

For estate planning, this has become of particular importance for those who wish to impose conditions on the distribution of their assets.  Even more so, for my estate planning and probate clients, I continue to reiterate that whether good, bad, fair, or unfair, the manner in which the assets are stated to be distributed will likely be valid.  One’s intent in their Will (or Trust) trumps the prerogative of a beneficiary to inherit.  The Courts agree, “it is the duty…to honor the testator’s intention within the limitations of law and of public policy.”  (39 Ohio Misc. 38-39).  No individual has a natural right to inherit from another’s Will.  Thus, conditions placed on that inheritance remain valid so long as it does not constitute a total restriction on a constitutional right.  Certain restrictions based on religion, marriage, and other such rights allow individuals one more level of control over their assets after death.

–  Gary Altman, Esq. and Adam Abramowitz, J.D.

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