Published on Family Business Magazine
By Mathew Erskine, March 4th, 2024
Putting conditions on bequests to heirs can ensure your beneficiaries act in accordance with your wishes. It could also spark litigation and harm family relationships.
In the realm of estate planning, the use of conditions on bequests offers a mechanism for individuals to exert influence or control over the distribution and use of their assets posthumously. These stipulations, which can range from simple to complex, ensure that the grantor’s wishes are adhered to and that the beneficiaries use the inheritance in a manner that aligns with the benefactor’s values or intentions. Grantors can impose specific conditions on the receipt of a bequest from a trust, tailoring the distribution of assets to their desires and the needs of the beneficiaries. These conditions carry significant influence over how and when beneficiaries will inherit their assets.
Family business owners can place conditions on bequests from a trust to facilitate a seamless transition of ownership and management to the next generation, all while aligning with the long-term objectives of the business.
Conditional bequests help mitigate risks associated with inexperienced or unprepared beneficiaries assuming control of the business, which can be particularly challenging in family-owned enterprises where emotional ties and family dynamics complicate business decisions. However, it is crucial to balance these conditions with the need for flexibility and avoid creating resentment or disincentives that could harm the business in the long term.
Matthew Erskine, Managing Partner, Erskine & Erskine
