It may be convenient to have another party hold property with the intent that the property revert back to the owner when the holder dies. One way to accomplish this is to sell property to the other party and contract with that party to name the owner as the beneficiary of the property in his or her will. The Estate of Gilbert No. 04–16–00641–CV (Tex. App.–San Antonio 2017) case provides an example of the hazards presented by these contracts if they do not follow Texas law.
Facts & Procedural History
The facts in this case are straightforward. In 2001, Gilbert’s long term girlfriend sold her house to him in exchange for Gilbert naming her the sole beneficiary in his will. Gilbert did so in 2006 and updated the will in 2008 without changing the beneficiary. The couple split up in 2015 and Gilbert changed his will to name his son as his sole beneficiary. Gilbert died four months later. The girl friend sued Gilbert’s estate for breach of contract and promissory estoppel.
Contract to Enter Into a Will
Texas law allows parties to contract to enter into a will. This is set out in the Texas Estates Code, which says that a contract executed or entered into on or after September 1, 1979, to make a will or devise, or not to revoke a will or devise, may be established only by:
- a written agreement that is binding and enforceable; or
- a will stating:
- that a contract exists; and
- the material provisions of the contract.
The key point is that the contract has to be in writing. Because the contract was not in writing in this case, the girlfriend dropped the contract claim. She still asserted that she was entitled to relief under promissory estoppel.
Promissory Estoppel Relief
Texas law allows for promissory estoppel. This is a judicial doctrine that allows the court to put the aggrieved party back in the same condition as they were prior to the transaction giving rise to the claim.
The trial court concluded that promissory estoppel did not apply where the actual remedy was to pursue a breach of contract claim. On appeal, the appeals court agreed. The appeals court made it clear that breach of contract is the only remedy available where a decedent failed to live up to his agreement to name a party as the sole beneficiary of his estate. It does not apply in this type of probate litigation type of case.
This case stands as a warning to those who have or are considering contracting with another person for a will. The contract must be in writing to be enforceable in Texas.
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