New Jersey appeals court ruled a surviving spouse failed to prove that her deceased spouse made an enforceable gift based on the deceased spouse’s failure to deliver the gift during his life to the survivor. Matter of the Estate of Herenchak, 2015 N.J. Super. Unpub. 2014 WL 9868901 (N.J. Super. Ct. App. Div. June 8, 2015)

Alexander Herenchak was a widower who was married for 41 years before he married Lyudmyla in 2005. Alexander died 5 years later, in 2010, at the age of 84.

Before their marriage, the parties entered into a pre-nuptial agreement in which each agreed to maintain sole ownership of all their respective property. They also waived their right to an elective share of the deceased spouse’s estate. However, the agreement did allow the Herenchaks to transfer property to each other during the marriage.

Prior to marrying plaintiff, Alexander entered into an “Agreement to Sell Development Easement” with the State of New Jersey, in which he agreed to sell a development easement on a 142–acre plot of farmland he owned to New Jersey for $20,000 per acre. The final total price for the purchase of the development rights was in excess of $2.7 million.

Lyudmyla was never a party to the agreement to sell the development easement on the farmland. However, the title insurance company required that Lyudmyla sign the deed for conveyance of the development rights and the affidavit of title because the marital residence was located on the farmland, although the area where the home was located was not included in the easement. Under New Jersey law, Lyudmyla had a right of joint possession to the marital home as long as both spouses were alive.

After Alexander died, his Last Will and Testament was probated. Under the terms of Alexander’s Will, Lyudmyla was given a life estate in the marital residence and $250,000 in a trust. Alexander’s two children from his first marriage inherited the remainder of his Estate. Lyudmyla did not challenge the Will.

Soon thereafter, Lyudmyla filed an order to show cause and verified complaint against Alexander’s estate, seeking to obtain one-half of the proceeds from the post-marital sale of development rights to the 142–acre farm Alexander owned. Lyudmyla’s claim to the sales proceeds stemmed from an alleged gift made by Alexander to her of one-half of the sales proceeds. The gift was allegedly evidenced by her participation in the signing of the documents required by the title insurance company. In response, Alexander’s estate filed a motion for summary judgment, and Alexander’s two children filed a motion to dismiss for failure to state a claim.

At the motion hearing, the trial court found that Lyudmyla was required to prove the elements of an enforceable, inter vivos gift via evidence that was “clear, cogent, and persuasive.” The elements needed to prove a gift from a decedent are: (1) an unequivocal donative intent on the part of the donor; (2) an actual or symbolical delivery of the subject matter of the gift; and (3) an absolute and irrevocable relinquishment by the donor of ownership and dominion over the subject matter of the gift. The trial court found that Lyudmyla failed to prove the elements of a gift, and therefore granted summary judgment in favor of Alexander’s estate. Lyudmyla appealed.

The appeals court affirmed, ruling that Lyudmyla failed to establish that the sale proceeds were a gift. Lyudmyla conceded that approximately $2.7 million from the sale was deposited exclusively into the Alexander’s bank account, which was in his name alone. Thus, there was no delivery of the alleged gift of one-half the proceeds from the sale to Lyudmyla.

The case is annexed here – Matter of the Estate of Herenchak

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