Case Law Update: Gifts
A husband and his wife contracted to sell their stock in a corporation to the corporation in exchange for monthly payments over 15 years. In the event of the “disability or death” of either, the payments are to be made to the couples’ “respective heirs, distributees and/or assigns.” The husband died with a will disinheriting three of his four sons and creating a trust for his wife for life, remainder to their fourth son.
After the wife’s death, the remainder beneficiary began an action for breach of contract alleging that the corporation had failed to make the required payments. The other three sons were joined as necessary parties, and the trial court granted their motion for summary judgment on the grounds that the terms of the contract showed that husband and wife intended to make an inter vivos gift of the payments to their four sons.
In Ross v. Ross Metals Corp., 928 N.Y.S.2d 327 (App. Div. 2011), the intermediate appellate court reversed, holding that by the terms of the contract, husband and wife retained control over distribution of the payments and therefore did not make the irrevocable present transfer of ownership necessary to make a gift.
Special thanks to William P. LaPiana (Rita and Joseph Solomon Professor of Wills, Trusts,and Estates, New York Law School) for sending me this case law update.