In the recent New Jersey Appellate Division case of Filippelli v. Ingis regarding the proceeds of a decedent’s IRA funds, two siblings fought over $75,000 allegedly promised from one to the other. In Filippelli, an aunt chose to pass her IRA funds to her niece, excluding her nephew. After the aunt’s passing, the niece promised her brother half of the IRA despite no obligation to do so. While she allegedly worked out some tax concerns, the niece gave her brother $35,000 as a gesture of goodwill. As you may have guessed, the niece did not pay her brother any additional money and a lawsuit ensued.
Generally, promises of a gift are not legally enforceable. This applies if someone promised to give you a gift upon their death, but never made it official in their Will, and now the administrator or beneficiary of that person’s estate is refusing to make good on the promise. It also applies here, where the gift is not related to a bequest or testamentary promise, but to an ordinary promise of a gift where the promisor has merely changed their mind.
The first argument the nephew made was that there was a contract between him and his sister. To prove a contract exists, the plaintiff must prove that an offer was made, the offer was accepted, there was “consideration” or a bargained-for exchange of promises or performance and both parties performed or at least began to perform. The nephew argued that an invitation to meet and sign releases of legal claims in exchange for payment of the purported balance due constituted offer, acceptance, consideration, and partial performance. This could have been a winning argument, but the brother never actually attended the family meeting nor signed the prepared release. Even if he had gone to the meeting and signed the release in exchange for payment of the balance, it’s not clear he could have given any consideration—as he had no legal claims to release in the first place. After all, the promise to give some amount between $75,000 and $110,000 was merely that—a promise to give a gift.
The second argument the nephew made is for something called “promissory estoppel,” which means that a court will force someone to follow through on a promise made if certain conditions exist. Courts in New Jersey will find promissory estoppel when a clear and definite promise is made with the expectation that the recipient will rely on that promise, that person does indeed rely on the promise, and withholding what was promised results in “definite and substantial detriment.” The judge here noted that the nephew had presented no evidence that he had suffered any detriment due to relying on his sister’s promise. As such, the nephew’s claim was totally dismissed, and he ended up with only the $35,000 initially given, instead of the total he might have gotten if he had either agreed to sign the release or if he had done something material in reliance on receiving the promised money.
The lesson here for anyone who is expecting follow-through of a promised, but not memorialized bequest, is to make sure that each element of either contract formation or promissory estoppel is established and provable, otherwise, you may accrue no legal rights to the promised gift.