25/09/2014

Often clients may wish to "rule from the grave" by attaching special conditions to a gift in their Will – but how far can they go in terms of the conditions still being valid?

This issue was recently tested in Hickin v Carroll & Ors (No 2) [2014] NSWSC 1059, in which a father made gifts under his Will to his four children - conditional upon them attending his funeral and becoming Roman Catholic within three months of his death.

The children were the children of the father’s marriage to his former wife. Around the time of separation, the former wife was baptised as a Jehovah's Witness, and in the following years so were each of the four children, who each remained active members.

The executors of his Will applied to the Court seeking a Declaration that the conditions attached to the gifts were void and of no effect so that the gifts were absolute gifts.

However, the Court decided that the requirement to become a Roman Catholic was a condition precedent which was not void for uncertainty, impossible nor contrary to public policy. Since none of the children became a Roman Catholic within three months of their father's death, their shares in his estate were instead divided among the other residuary beneficiaries named in the Will. In reaching this decision, the Court observed (amongst other things) that:

•       A person has the right to dispose of their worldly goods to whomever and however they please, including upon conditions.  This of course is subject to their Will being challenged under the family provision legislation (such as Chapter 3 of the Succession Act 2006 (NSW)), especially in relation to any eligible persons that one might consider the deceased has a moral duty to provide for, such as the deceased's own children

•        A condition does not fail for uncertainty of expression simply because it lacks clarity of expression. The fact that the wording is so unclear as to require a reference to the court does not render the condition void for uncertainty. Also, a condition is not void for uncertainty merely because there is some difficulty in ascertaining its application to the facts - the Court's task is to try to give effect to it, and it is only when that can't be done that the condition is uncertain.

•        Whether a condition has to be satisfied before receiving a gift (a "condition precedent") or after receiving a gift (a "condition subsequent") is critical. So in this case, because the conditions had to be satisfied before receiving the gift, they were conditions precedent and, because they were not uncertain, the Court held that the gifts had never vested in the children.  As a result, by not becoming Roman Catholic they had not become entitled to receive their gifts and so their portions could go to the other residuary beneficiaries.  But if the conditions had been ‘conditions subsequent’, then legally the gifts would have already been made to the children, so that if the conditions were uncertain, and therefore void, their portions would nevertheless have remained vested in them.

•        A condition is not impossible just because its performance is highly improbable, or because it is not totally in the power of the person receiving the bequest, or even out of any human power, to ensure its performance.

•        Assuming that it is not uncertain or impossible, the law will uphold a testamentary gift which is conditional upon the person receiving the gift adhering to, embracing or renouncing certain religious beliefs, unless that condition infringes some other aspect of public policy which the courts consider should take precedence over the freedom of the testator to prepare their Will as they wish.  In this regard, outside the area of employment, there is no general protection under Commonwealth law from being discriminated against on the basis of religion or belief.

So this case provides useful guidelines as to how far a person can go in terms of imposing conditions upon gifts in their Will.

For further information on Estate Planning, call Townsends Business & Corporate Lawyers on (02) 8296 6222.