How Far Would You Go To Control Your Heirs?

9:11 pm Uncategorized

A trust is one of the most flexible and most powerful estate planning tools, and not just for avoiding unnecessary estate taxes.Many of the clients who come through our office choose to create trusts for other reasons as well; namely to protect their heirs from predators, creditors, and sometimes even from themselves.Sometimes a client goes even further than that, and wishes to place restrictions and attach conditions on an inheritance. In general, these conditions are enforceable—as in the case of a beneficiary being required to have graduated from college before having access to his inheritance—but is it possible to take these conditions too far?Should a grantor be able to restrict who his beneficiaries can marry?

This is the issue that is being argued right now In re Estate of Feinberg, 383 Ill. App. 3d 992, in what is being referred to as “The Jewish Clause” in this article on the Trusts and Estates website. In this case, grantor Max Feinberg:

“created a trust in which he declared that any descendant of his — that is, any descendant other than his children — ‘who marries outside the Jewish faith (unless the spouse of such descendant has converted or converts within one year of the marriage to the Jewish faith) and his or her descendants shall be deemed to be deceased for all purposes of this instrument as of the date of such marriage.’”

At first the Illinois court ruled that such a clause was invalid as going against public policy, but one judge’s strong dissenting opinion has resulted in the Illinois Supreme Court agreeing to hear the case.

Although the case is being heard in Illinois, the decision could eventually have an impact on trusts created in other states, and so we put this question to our readers: How far should a grantor be able to go in placing conditions on an inheritance?

Get started by contacting our Orange County asset protection estate planning law firm as soon as possible.

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