Chris Brown was a successful Australian stock trader.  As his wife had already died, Chris left his entire $12 million estate in trust for his daughter, Claire.  He had been providing for Claire’s financial support with an allowance of $500 per week, even as an adult.

However, the trust included two stipulations.  Claire needed to get a job, and she needed to contribute something to society.  After Chris died, Claire refused to meet the conditions, going on welfare instead.  She claimed to have a severe case of attention deficit disorder, so severe that she can never hold down a job.  She said, “I have called myself a broke millionaire because I am broke constantly and can’t do anything about it.”  A lawsuit has been filed against the trust, demanding distributions regardless of whether the conditions have been satisfied.

We don’t know yet who will prevail in the lawsuit.  The news reports are silent on whether Claire’s symptoms might be treatable with medication, or what strategies already have been tried to help her cope with her ADD.  It seems that Mr. Brown took to heart Warren Buffett’s advice to give children “enough money so that they would feel they could do anything, but not so much that they could do nothing.”

Some conditions for allowing a beneficiary access to trust assets are enforceable, some are not.  For example, a trust cannot be used to try to break up a marriage, or to force other behaviors that are against public policy.  It can be used to meet specific financial goals, such as funding a college education.  Insisting that a beneficiary have a job falls into a gray area, even if the motive is laudable.  What if the beneficiary has a disability much more severe than attention deficit disorder?  Will a state be willing to support a beneficiary with welfare benefits when the beneficiary could have access to a million-dollar trust?

These are questions that an experienced estate planner can help to answer—and the answers may vary from state to state.  Generally, a carrot and stick approach will be more successful than the all-stick strategy chosen by Chris Brown.  See your estate advisors to learn more.

Do you have a question concerning estate planning? Call us at 920-563-6616 ext. 3070, or email wealth@bankwithpremier.com.