Can the dead control the living?

Posted by on Jan 14, 2014

Can the dead control the living?

Control. We have less of it than we think, and yet, we are creatures who want control. We want to control our own lives. Some of us want to control other people’s lives! Much about human relationships is a jockeying for who has control, how much, and over what.

Parents often come in to do estate planning because they want to control when their children will inherit their wealth and who will take care of their children if they die before kids are grown up. Lots of parents are concerned about young adults inheriting a house and money before they’re equipped to handle it. They put property in trust and have their trust document say that property must be held until a certain condition is met, i.e. until a child reaches an age, say 25, 30—maybe even 40, though that’s stretching it.

Albertina came to my office to revise her existing estate plan. She has a daughter in her 40s, and a 10-year old granddaughter Sophia. Albertina is 85 years old and is unlikely to live long enough to see Sophia off to college. Albertina has spent a lifetime working hard and amassing a small fortune. She was adamant about including a provision that Sophia will inherit half of her estate only if Sophia has acquired a master’s degree or higher by the age of 25.

“That’s a tall order,“ I said. “What if she doesn’t go for a master’s degree?”

“Well, then she won’t get my money,” was Albertina’s reply.

Harsh? I thought so.

I asked Albertina if she would really want to deprive Sophia of an inheritance if she pursued a path in life that didn’t involve a master’s degree. Her answer was ‘yes.’ She wanted to give this child money but only if the child performed in a specified manner career-wise. What if she wants to be an artist, a cab driver, an organic farmer in Appalachia? No inheritance.

Ruth came in wanting to start a trust-based estate plan from scratch. She has three adult children and owns a house jointly with Jim, the man she’s been married to for 40 years. Ruth and Jim have been estranged for two decades but never legally divorced. Jim lives across town in another house he owns with his long-time partner Diane. Jim handles all of Ruth’s finances as an on-going favor.

I drafted up a straightforward trust for Ruth, letting her know that she can give her share of community property to whomever she wants, her three children, but that she cannot control what happens to her husband’s share of community property. I quickly received an email from her, asking me to add a provision in her trust stating that if she dies first, Jim cannot use his estate plan to give any of his property to Diane, the woman he lives with and will likely marry once Ruth is gone.

I also got a call from Ruth’s son, also asking me to make sure that Ruth’s trust prohibits Jim from doing anything in his own estate plan other than leaving everything to the three kids. I explained that 1) It’s Ruth’s estate plan, not that of an adult child-beneficiary; and 2) We can’t use our own estate plan to state what someone else may or may not do with their property.

Neither Ruth nor her son were going to take “no” for an answer on either point, insisting that Jim could not ever leave his portion of his and Ruth’s property to Diane, his future wife. I disengaged from working on the matter, explaining that I could not make provisions in Ruth’s trust that would violate community property law, not be enforceable, and cause conflict down the road.

Dead hand control is the name of a legal concept, conditioning a post-mortem gift on a beneficiary’s specified behavior.

I think of it as giving a gift with one hand and taking it back with another.

We do frequently condition a gift on a beneficiary reaching a certain age, but this is a natural phenomenon, getting to be age 21 or 25, not being a certain way or living according to the terms of the testator.

Dead hand control has been used historically to condition gifts on a child marrying within the family race or religion, staying off of drugs, or having gainful employment.

There are legal treatises discussing when dead hand control might be considered in violation of public policy, such as restricting religious freedom or the freedom to marry.

Regardless of whether a severely controlling condition might hold up under a court challenge, I discourage dead hand control.  Whether it’s legal or not, it sends a message: Here’s a gift but only if you do as I say. I approve of you only if you do X. Or: my marriage to you is over, and don’t have another one.

I believe estate planning is part of a larger psychological process of coming to terms with the finite nature of our individual lives; that is, letting go. We have little control over much of what happens to us while we’re alive—we do control how we respond. We have virtually no control over how we will die. We have no control over what others will do when we’re gone. If we fear or don’t like what someone may do with our money, we are free to not give. If we do give, let it be a true gift.