Legal Memorandum: Promise to Make a Gift in IL

Issue: Under Illinois law, is the failure to comply with the proper procedures (either a governmental procedure or a bank’s internal procedure) to transfer a beneficiary interest in an IRA benefit merely a broken promise to make a gift?

Area of Law: Estate Planning & Probate
Keywords: Gift; Promise to make a gift; Beneficiary interest
Jurisdiction: Illinois
Cited Cases: 297 F.3d 558
Cited Statutes: None
Date: 10/01/2008

In Dooley v. James A. Dooley Associates Employees Retirement Plan, 100 Ill. App. 3d 389, 426 N.E.2d 1028 (1981), the Illinois Appellate Court reviewed the efficacy of a beneficiary designation for a retirement plan.  Reviewing the law regarding life insurance policy beneficiary case law, which was applicable in principle, the court stated the issue as a determination whether the decedent substantially complied with the plan’s stated requirements thereby effectively changing his beneficiary designation.  Id. at 394, 426 N.E.2d at 1031-32.  The plan’s requirements were twofold:  changes in beneficiaries had to be in writing and filed with the company.  Id. at 394, 426 N.E.2d at 1032.  The court held that even if the writing requirement had been met (the trial court found it was not), there was no filing, because the decedent only gave the letter to company officials without any of the formal requisites to constitute a filing.  Id. at 394-95, 426 N.E.2d at 1032.  That is, the document was not deposited with and exclusively controlled by the officer charged with keeping records for the company.  Id. at 395, 426 N.E.2d at 1032.  See also Melton v. Melton, 324 F.3d 941 (7th Cir. 2003) (where Employee Retirement Income Security Act (ERISA) and Illinois state law generally required attempted waiver by designated beneficiary of group term life insurance policy benefits to be explicit, the spouses’ divorce agreement, which did not mention the policy, was not explicit enough to operate as a waiver of the former wife’s interest in the deceased […]

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