Conditional Gifts in Wills Part 1 – Brewsters Millions
I can think of no better introduction to this movie than the one the brilliant creators devised: “This is the story of Montgomery Brewster, a relief pitcher in the minor leagues of life who got handed the American Dream on a very hot plate”.
The 1985 Brewster’s Millions is a cult classic about Montgomery Brewster, an unassuming man leading a fairly unremarkable life as a failed baseball player, who comes into a windfall inheritance…….but there’s a catch….a condition…..
He must spend $30 million dollars in 30 days to receive the remainder of his vast inheritance. Additionally, at the end of the 30 days he cannot own any assets, just the clothes on his back, he can’t give any of the money away, he can’t gamble it, he can’t destroy it and he cannot tell anyone about the catch.
Considering the current price of petrol, electricity, produce and the seemingly never-ending rate hikes by the RBA the above conditions don’t seem that hard, but the real question is would this conditional gift be considered valid in NSW?
This is Part 1 of a 3-part mini-series on conditional gifts in wills. Essentially this Blog will cover what a conditional gift is, the main grounds that conditional gifts are found to be invalid on, and lastly whether Montgomery Brewster has been stitched up by his old dearly departed Great Uncle Rupert?
What is a conditional gift in a Will?
When a person receives a gift under a Will, but they are only entitled to receive it under particular circumstances, this is called a conditional gift.
There are two types of conditional gifts. Firstly, is what’s called a condition precedent gift, which means that a beneficiary must meet certain requirements before they receive the gift. Secondly, is what’s called a condition subsequent gift, which means….that’s right you’ve guessed it… the beneficiary receives the gift, but must meet certain requirements to be permitted to keep it.
The key difference between a condition precedent and a condition subsequent is that if a condition precedent is held to be void by the court then the gift fails entirely and the beneficiary gets nothing. Whereas in the case of a condition subsequent if the court finds it void the gift still takes effect, just as an unconditional one.
A common condition precedent found in Wills is when a beneficiary will only receive their inheritance once they reach a certain age.
The wording of conditional gift clauses must be considered carefully and if you’re thinking of making gifts under your Will conditional on certain events happening then you should definitely speak to an experienced estate planning solicitor about it.
The main grounds of invalidity
The courts take a very protective approach when it comes to the last wishes of a will maker and generally prefer to uphold a conditional gift unless the condition set by the will maker:
- is impossible to achieve;
- is uncertain;
- violates a rule of law;
- is against public policy.
Is Brewster’s challenge impossible?
Now you might be thinking….nah I could spend $30 million in 30 days with nothing to show for it at the end, but my counter to you would be could you do it back in 1985 when such a thing as 1 cent lollies existed?
Is Brewster’s challenge merely difficult or improbable? Because if it is, the court considers that ‘difficult’ and ‘improbable’ fall short of ‘impossible’. However, what’s impossible is subjective.
Take for example the case of Hicken v Carroll where 4 children received their inheritance but it was subject to a condition subsequent, being that they be baptised in the Catholic Church within 3 months of their father’s death. The children challenged the condition on all 4 grounds above and failed. This case was decided in 2014, I think that if it were tried today, we would get a different outcome because of the evolving opinions on what’s good public policy, but I’ll discuss ground 4 later in Part 2 of this series. Back to Brewster.
In 1987 Brewster might have been able to make an argument for impossibility, but considering his condition was a condition precedent, if he was successful in voiding the condition then the gift would have failed too. However, if this were to occur in today’s current climate of inflation, I highly doubt that Brewster’s challenge would be considered difficult to fulfil let alone impossible.
Disclaimer: The information contained in this article is provided as general information only. It is not intended to be legal advice and it should not be used or relied on as legal or professional advice.
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