LOCHDOWN FLICKS: ESTATE PLANNING MOVIES THAT MIGHT COUNT AS CPD (BUT PROBABLY WON’T) – PART 4
Brewster (played by Richard Pryor) is a middling baseball player in the minor leagues. One day, he learns that he is the sole living heir of his great uncle, a man previously unknown to Brewster. His great uncle is a multimillionaire although he has come to despise wealth. With no other relatives, his great uncle gives his fortune to Brewster, but in a way that is designed to teach him to hate money too. He leaves Brewster a video will in which he sets out a challenge, as well as a few barbed insults:
“Brewster, they tell me you’re my only living relative, and I got to say I’m very disappointed. But I believe in being honest, and I guess I’m stuck with you. I’m going to teach you to hate spending money. Here’s my proposition. You have thirty days in which to spend thirty million bucks. If you can do it, you get 300 million. You have to spend the thirty million, but after thirty days, you’re not allowed to own any assets. No houses, no cars, no jewelry, nothing but the shirt on your back. If you fail, you don’t get diddly.”
In other words, if Brewster wants his full inheritance, he must first satisfy his uncle’s conditions and spend $30,000,000 in thirty days.
$30,000,000 doesn’t go as far as it used to
At first, spending $30 million seems a daunting challenge. And that’s fair enough. When Brewster’s Millions was made in 1985, $30 million was real money.
But in the 21st century, spending that amount is just a matter of creativity. You could start with the world’s most expensive taco at $25,000 per unit (literally the only taco that requires a deposit). Eat 1200 of them and it’s mission accomplished. Or you can diversify a little if a taco-heavy investment portfolio is not your style. For example, why not have Rihanna sing during your meal at a cool $8,000,000 per booking? And how about a bottle of 1945 Romanée-Conti Grand Cru at $558,000 to wash it all down? Richard Pryor would approve.
But let’s stop messing about. In the age of space tourism, spending $30,000,000 should be easy. $28,000,000 will get you a seat on Jeff Bezos’ Blue Origin next to the man himself. At SpaceX, Elon Musk will want to know where the rest of his money is – $30m will barely cover half the $55m price tag for a seat on his rocket. In comparison, Richard Branson seems to be running some kind of Contiki bus trip, with tickets on his Virgin Galactic shuttle costing a mere $250,000.
The Wonderful World of Conditional Gifts
What Brewster’s uncle did in his will was give his nephew a conditional gift. This means that the gift is conditional on or subject to an event or circumstance described in the uncle’s will.
If properly drafted, conditions on testamentary gifts are valid, subject to some general restrictions on testamentary freedoms that mostly relate to family provision obligations. Conditions take the form of a condition precedent (in which the condition must be satisfied before the gift takes effect), or a condition subsequent (in which a gift may be terminated if a proscribed event occurs).
The classic conditional gift is a sum of money dependent on the beneficiary reaching an important milestone, such as graduating, getting married or entering a profession. Of course, over the years will makers have devised more creative hurdles. Consider these examples:
- that a beneficiary obtain the title of Duke from the Government (condition invalid; Egerton v Earl Brownlow);
- that a beneficiary refrain from “misbehaviour” and not “indulge in criminal activity” (condition invalid; Re Estate of Kuzma);
- that an executor make a donation to a hospital with racist conditions attached (condition invalid; Kay v South Eastern Sydney Area Health Service);
- that a beneficiary not challenge the testator’s will (condition invalid; In the Will of Gaynor); or
- that a beneficiary marry or not marry in accordance with the testator’s wishes (generally invalid; multiple cases).
Conditional gifts are an area where will makers can get a little too clever for their own good. Conditions will be ineffective or void if they are uncertain, illegal, impossible to comply with or contrary to public policy.
Invalidity can have some surprising consequences. In the case of a void condition subsequent, the beneficiary takes the gift free of the condition. However in the case of an invalid condition precedent, the gift fails entirely meaning the beneficiary does not receive the bequest at all.
Arguing a condition is contrary to public policy gets the most interest legal analyses. Consider these contrasting cases.
In Hickin v Carroll, a condition that the testator’s children convert to Catholicism was held valid because it did not infringe the beneficiaries’ freedom to choose their own faith.
In Ebbeck, a similar condition (but one which also incorporated the beneficiaries’ spouses) was held invalid. This wasn’t because of the restraint on religion entailed in the clause, but because the condition was likely to induce discord in an existing marriage. It was therefore deemed contrary to public policy.
So, is Brewster’s Millions bogus?
As with most estate planning movies, Brewster’s Millions has an occasional nugget of legal gold surrounded by a fair bit of malarky.
Let’s put aside the issue of the video will (which have been accepted by Australian courts in the past, but which are still the worst idea ever). Does the Brewster will pass the certainty, impossibility and public policy tests?
Firstly, the terms of the will are plainly certain.
Secondly, the will was not impossible to perform (although it was comically difficult).
It’s the third test where the will might have some difficulties. Brewster’s uncle didn’t positively encourage any illegality, but he did advocate wasting a large part of the estate. The question would be whether the courts would object to the wasting of the estate more than they would support the concept of testamentary freedom. On balance, I think a court would find the condition valid.
Are Conditional Gifts a good idea anyway?
So does this mean that we should add Brewster’s Millions as part of the syllabus for legal courses?
No. Good lord, no.
This is because a testator cannot predict the future. What if your beneficiary has a medical emergency or experiences other financial hardships all while their inheritance is tied up by a conditional gift? Also, restrictive conditions placed on assets may be meaningless once legal ownership is transferred. Finally, if drafted improperly, conditions may ultimately have the opposite of the intended effect.
In other words, testators should be wary of trying to control wealth from the grave.
Brewster’s Millions is available to rent on Apple TV+