The question of whether you can prohibit trust benefits for convicted felons is a common one for estate planning attorneys like myself in San Diego, and the answer is generally yes, with careful drafting and understanding of the legal limitations. Trusts are powerful tools for controlling the distribution of assets, even after your passing, allowing you to specify conditions that beneficiaries must meet to receive their inheritance. However, outright prohibitions can be legally complex, particularly concerning public policy and potential challenges based on reasonableness. It’s crucial to work with an experienced estate planning attorney to ensure your wishes are legally enforceable and won’t be overturned in court.
What happens if I simply exclude a beneficiary?
Excluding a beneficiary altogether is the most straightforward approach, but it doesn’t address situations where a beneficiary might commit a crime *after* the trust is established. Many people want to provide for loved ones, but also want to avoid supporting behavior they disapprove of. According to a recent study by the Pew Research Center, roughly 65 million Americans have a criminal record – a significant portion of the population. Simply disinheriting someone doesn’t prevent them from potentially benefiting through other avenues if the trust doesn’t explicitly address post-establishment conduct. A well-drafted trust can include a “spendthrift” clause, protecting assets from creditors, but this doesn’t prevent distribution to a beneficiary who has met a specified negative condition like a felony conviction. We must consider the ramifications of such exclusions, especially concerning potential challenges from disgruntled beneficiaries.
Can I add a clause that triggers if a beneficiary is convicted of a crime?
Yes, you can absolutely add a clause that triggers upon a beneficiary’s conviction of a felony or other specified crime. This is often done using a “condition precedent” – meaning the beneficiary must *not* be convicted of a crime to receive the benefit. The clause should clearly define what constitutes a triggering event (e.g., a conviction, not merely an arrest), and specify what happens to the funds – do they go to another beneficiary, revert to the estate, or go to charity? California Probate Code allows for such conditions, but the clause must be reasonable and not violate public policy. For example, a clause that disinherits someone for a minor misdemeanor might be deemed unreasonable. According to the FBI, in 2022, there were over 10.3 million arrests made in the United States – highlighting the statistical likelihood of a beneficiary potentially facing criminal charges at some point.
I once had a client, old man Hemlock, a retired ship captain, who was adamant about protecting his granddaughter’s inheritance.
He’d heard stories of family members squandering inheritances on reckless behavior. He wasn’t worried about substance abuse, but he’d been defrauded by someone years ago and feared a similar fate for his granddaughter. He wanted a clause that would protect her funds if she were ever convicted of financial crimes. We drafted a clause stipulating that if she were convicted of fraud, embezzlement, or similar offenses, her share of the trust would be used to compensate any victims of her crimes, with any remaining funds going to a charity supporting victims of financial abuse. It seemed harsh, but he was resolute. A few years later, his granddaughter, unfortunately, became involved in a Ponzi scheme, defrauding several investors. The trust provision was triggered, and the funds were used to provide restitution to the victims, a somber outcome, but one that aligned with his wishes and prevented further harm.
However, not all situations are straightforward, I recall a case with the Peterson family.
Their son, Michael, had a troubled youth, struggling with addiction and minor offenses. They feared he might relapse and squander his inheritance. They tried to include a clause that disinherited him if he were ever convicted of *any* crime, no matter how minor. I advised against it. It was overly broad and likely unenforceable. We negotiated a more reasonable clause that only triggered if he were convicted of a felony involving substance abuse or financial exploitation. Years later, Michael was arrested for a DUI. The clause didn’t apply, and he received his inheritance, which he used to enter a rehabilitation program and rebuild his life. He was immensely grateful, and his parents were relieved. It just proves that reasonable, well-drafted clauses are far more effective than overly restrictive ones. Approximately 40-60% of individuals with substance use disorders relapse at some point, so it’s critical to consider the nuance of such provisions when drafting a trust.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
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| Ocean Beach estate planning attorney | Ocean Beach estate planning attorney | Sunset Cliffs estate planning attorney |
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