Conditional Gifts Explained
There’s plenty to think about when writing a Will, such as whether you want to leave ‘conditional gifts’ to loved ones. Conditional gifts are a great way of helping, rewarding or showing appreciation to beneficiaries while ensuring the money is spent in a way you’d approve. Essentially, specific conditions usually have to be met before money or assets can be released. There are several different ways in which conditional gifts can be made, so let’s find out more.
Examples of Conditional Gifts
Writing a Will allows you to provide adequate financial protection for those you care about. You can ‘gift’ people parts of your estate according to certain conditions. For example, you may decide to give your children a set amount of money when they reach eighteen or put money aside that must be used for university fees or to fund further study. Some parents leave conditional gifts for a house deposit to prevent the beneficiary from spending their inheritance in any way they please.
Are There Different Types of Conditional Gifts?
There are two main types of conditional gifts. These are referred to as ‘precedent’ or ‘subsequent.’ A ‘condition precedent’ means the beneficiary inherits upon meeting the stated requirements such as turning eighteen or obtaining a university place. A ‘condition subsequent’ means the beneficiary is given the gift but can lose it later in life should they fail to meet the specified condition. A beneficiary will have to forfeit their gifts if a court rules they’ve not met the specific criteria upon which their gift was based.
How are Conditional Gifts Set?
Discretionary trusts are a great way to set and manage conditional gifts. Appointed trustees will refer to your ‘letter of wishes’ which will guide them on how and when gifts should be allocated. Discretionary trusts are used to support beneficiaries who may require more financial help than others. It’s possible, for instance, to set a monthly or annual allowance to avoid overspending. As many children don’t know how to handle large sums of money responsibly, conditional gifts are a great way to protect their future while giving them a chance to mature. If you want to learn more about the distribution of assets as conditional gifts, speak to a Kent accountant for probate services. Professional advice can come in extremely useful, especially if you’re a Will executor or have been appointed to look after a Trust.
Are Conditional Gifts a Good Idea?
Conditional gifts can put your mind at ease when writing a Will as you know your money will be put to good use and not be wasted. A conditional gift is also a great way to keep supporting your children or family in specific ways after you die. Of course, some beneficiaries will be frustrated by your conditions, hoping to do as they please with the funds. But as it’s your money, you’ve every right to set limits and guidelines.
There are many different financial arrangements to be made in life to support people post death, so it’s worth organising your estate, speaking to Kent tax advisors and knowing exactly what your financial situation is like before writing a Will.
