Conditional Bequests: Lessons From Rodney Dangerfield

The movie Easy Money is the story of Monty Capuletti, played by Rodney “I Don’t Get No Respect” Dangerfield.  Capuletti was a good family man, but completely undisciplined when it came to drinking, smoking, gambling, and overeating with his neighborhood friends.  His wife Rose was a tolerant spouse, but her mother had nothing but contempt for her slovenly son-in-law.  She knew Rose could have done much better.

The mother-in-law’s estate plan, kept secret until her death was announced, promised Monty’s family ten million dollars if he could reform, starting with a full year of living vice-free.

The money dangled in front of the Capuletti family is a classic example of a conditional bequest, a testamentary gift that is contingent upon some performance by the recipient.  In Monty’s case, he needed to straighten up his act.  But conditional bequests can take many forms.

Do charities ever get conditional bequests?

Sure, all the time.  Every restricted bequest is a conditional bequest.  For example, “I bequeath and devise $1 million to CHARITY to be used exclusively for providing temporary housing arrangements for single mothers with children under the age of five.”

This gift is clearly contingent upon CHARITY’s willingness and ability to use the funds as described.  There are times when organizations refuse conditional gifts because of an inability or reluctance to carry out the testator’s wishes.

Are conditional bequests enforceable?

This has been a hot topic recently — like for the last six centuries.  Conditional bequests stand at the intersection of two hallowed legal principles.  The first is that an owner always controls their own property and can dispose of it as they please.

The second is that a true gift must have no strings attached.  Conditions are surely strings.  In popular legal parlance, a particularly onerous bequest condition is known as a “dead hand,” i.e., a reaching out from the grave by a decedent who just cannot give up control.

In very general terms, courts tend to honor conditions on gifts unless the donor has truly gone off the rails.  In other words, the giver’s right to control tends to trump the recipient’s unfettered use.  But there are limits.

Restrictions that are strangling, malicious, or in clear conflict with important public policies are most likely to be invalidated.  For example, a charitable bequest that required an organization to discriminate against a particular race would certainly be rejected.

So too are bequests that forbid a beneficiary to marry, or require that they divorce.  However, even here, courts tend to tread lightly.  Where a marital restriction is based on religious beliefs, a condition may well be approved.  See Shapira v. Union National Bank,315 N.E.2d 825 (Ohio 1974) where the testator required his sons to marry Jewish women within seven years, with the additional proviso that the parents of the bride(s) were Jewish as well.

Notwithstanding that case, other cases reject bequest conditions requiring the recipient to practice a specific religion.  Bequest condition cases are not always consistent!

In the case of an impermissible bequest, does the intended beneficiary simply get the gift with no strings attached?

If a court refuses to enforce a condition, it is usually because the restriction in some way just goes too far.  In some (not many) cases, this will result in an unconditional award of the property to the intended beneficiary.

However, most testators that place stringent conditions on gifts have fallback provisions in the will that specify what happens if a given bequest fails.  Most typically, the gift goes to someone else or to the residuary estate.

If a conditional bequest passes muster, who decides whether the required restrictions have been met?

The reader has probably noticed that conditional bequests come in two flavors — conditions precedent and conditions subsequent.  The Capuletti case involved a condition precedent:  Monty had to live a clean life for a year before he could get the payoff.

Most (but not all) conditional charitable bequests impose conditions subsequent.  Once the charity receives the gift, it is obligated to use it in the way prescribed by the testator.  If the charity knows it cannot fulfill the condition, the best course of action is to decline the gift.

In the case of conditions precedent, it is usually the executor or someone else named in the will who monitors and evaluates the performance, or not, of the required act.  For example, in Easy Money, Mrs. Monaghan (the mother-in-law) deputized her lawyer to track Monty’s adherence to standards of “clean living.”

But what if the condition is to be performed after the closure of the estate?  Is the beneficiary simply on the honor system to carry out the decedent’s wishes?

By this time, the executor is likely out of the picture.  If the conditional bequest was made to a charity, it is typically an honor-system approach to compliance.

However, the larger the restricted bequest, the more likely that the charity will be subject to scrutiny.  This will typically come from one or both of two sources: (1) the state Attorney General, who is generally responsible for most matters pertaining to charities; or (2) even more likely, the beneficiaries (usually family members) who are next in line to receive the gift if the charity fails to observe the conditions.

What happened to Monty?

The movie had a surprise ending.  Monty managed to vanquish his vices for the required year and earned his big payoff.  The award presentation involved the reappearance of Mrs. Monaghan, who had faked her own death to induce Monty to reform sooner rather than later.

As the film closes, we find our hero living in a mansion with his family and his mother-in-law, now present as a permanent, live-in monitor of Monty’s reformed habits.  Monty, therefore, wound up in the unenviable position of having a condition precedent and a permanent condition subsequent.  A double whammy if there ever was one.  In art, as in life, poor Dangerfield continued to “get no respect, no respect at all!”