A Sermon on the Mount (Sinai): Enforceability of Charitable Pledges Against an Estate and Guidance for the Estate Planner and Benevolent Personal Representative.

• Author: Henry, Thornton B.
• Position: Real Property, Probate and Trust Law

Charitable institutions often submit claims in estates for unpaid pledges that a decedent made. It is not uncommon that the personal representative pays them without much deliberation, often based upon his or her belief that the decedent "would have wanted it that way." In states that have adopted the entirety of [section]3-715 of the Uniform Probate Code (2010) (UPC), which authorizes a personal representative to take certain enumerated actions, the personal representative would generally be justified in making the payment. Subsection (4) of 3-715 of the UPC provides that a personal representative has the authority to "[s]atisfy written charitable pledges of the decedent irrespective of whether the pledges constituted binding obligations of the decedent or were properly presented as claims if, in the judgment of the personal representative, the decedent would have wanted the pledges completed under the circumstances."

The comment to subsection (4) acknowledges that charitable pledges are, from a contractual standpoint, somewhat of an enigma. It is for this reason that the UPC sidesteps the contractual issue and simply provides the personal representative the authority to pay the pledge "where he believes the decedent would have wanted him to do so without exposing himself to surcharge." The rub is that when Florida adopted the UPC and, specifically when it adopted [section]3-715, subsection (4) was one of the only powers it did not adopt. (1)

The question, then, is what does Florida law provide regarding the enforceability of charitable pledges against a decedent's estate? What should the personal representative consider before honoring the pledge? Part I of this article explores the issue as framed by Mount Sinai v. Jordan, 290 So. 2d 484 (Fla. 1974), the only Florida case to address the issue. Part II highlights practical considerations and provides guidance when personal representatives are confronted with a charitable pledge of questionable enforceability. Part III offers a drafting suggestion to estate planners to facilitate the enforceability and payment of charitable pledges.

Mount Sinai's Twin Peaks

Somewhat surprisingly, it was not until 1973 that a Florida court addressed the issue of the enforceability of a charitable pledge in the absence of reliance. Perhaps more surprising is that in the nearly five decades following the Florida Supreme Court's decision in Mount Sinai, there has not been a single other published case in Florida addressing the question.

The Mount Sinai facts are straightforward. Harry Burt executed two pledges of $50,000 each in 1968. (2) The pledges provided, in pertinent part: "In consideration of and to induce the subscription of others, I (We) promise to pay to Mount Sinai Hospital of Greater Miami, Inc. or order the sum of[f]ifty [t]housand and no/100 dollars $5,000.00 payable herewith: Balance in [n]ine equal annual installments commencing on January (sic) 1 of...." (3)

The question before the court was whether, in the absence of reliance on the promise, the pledge was binding against Mr. Burt's estate when the only evidence of consideration was to induce the subscription of others. (4)

The trial court ruled in the charity's favor, holding there was sufficient consideration. On appeal, the Third District Court of Appeal noted a dearth of Florida law on the issue and accordingly turned to other jurisdictions when it found two competing views. (5) In several jurisdictions, courts held that this "promise for a promise" was enforceable if additional contributions were made by reason of the inducement. (6) The Third District did, however, find a 'connecting thread' of reliance in many of these cases. (7) By contrast, courts in other jurisdictions held that mutual promises to subscribe lacked sufficient consideration. (8) In these cases, the promises could not be consideration for other subscriptions because that would constitute "past consideration." (9) The Third District sided with the latter viewpoint holding that pledges whose only consideration is the inducement of others are a "mere gratuitous promise of a future gift lacking consideration and, hence, unenforceable as a nudum pactum." (10) The Third District further held that "[w]e would still adhere to this proposition even if there had been evidence, which there was not, that the decedent's pledge were used to induce others to subscribe." (11) It certified the question to the Florida Supreme Court.

The Florida Supreme Court affirmed, and in so doing, created a two-prong test to determine the enforceability of charitable pledges against a decedent's estate.

* The First Prong: Specificity--As for the first prong, the Florida Supreme Court held that:

... in order for a pledge to survive the death of the donor and be considered a valid claim against the estate.the document stating the conditions of the pledge must recite with particularity the specific purpose for which the funds are to be used. It would, for example, be insufficient if the pledge designated the general operating fund.... Therefore, the donative intent as to the specific material plan ... must be made an integral part of the pledge instrument, limiting the exercise of discretion by the donee within the boundaries set forth by the instrument. (12)

The Florida Supreme Court explained that the reason for the first prong was that "unless the donor has made specific provision for the maintenance of a fund or source of funds for the continued payment of the pledge, this debt if enforceable could be a material burden upon the decedent's estate. Clearly, then, by requiring the donor to recite with particularity the specific purpose for which the funds are intended, he should then consider from which source he intends to meet this obligation in the event of his premature death." (13)

* The Second Prong: Detrimental Reliance--As to the second prong, the Florida Supreme Court required that "the donee must affirmatively show actual reliance of a substantial character in...