What is an "Estate Note"? | Sharpe Group
Posted August 29th, 2019

What is an “Estate Note”?

I don’t know.

I’m a lawyer, and try as I may, I cannot, in any law library, find a definition of “estate note”.

It’s a made-up, meaningless term.

There are, however, two instruments wrongfully called “estate notes”:

  1. an enforceable pledge, and
  2. a contract to make a will.

The garden variety enforceable pledge is a naming pledge (always for a sizable amount of $$). The pledge agreement provides that to the extent the pledge is unpaid upon the pledgor’s death, the unpaid balance is an obligation of the pledgor’s estate.

A contract to make a will is a contract. Donor promises to make and keep in force a will that leaves $X to CHARITY. In return, CHARITY provides consideration to Donor, such as a promise to put Donor’s name on an endowment fund.

In most if not all states, a contract to make a will must be executed with the same formalities as a will. Meaning it must be witnessed.

Use of the term “estate note” won’t confuse donors.  But it surely may confuse their lawyers.

It’s far better to think in correct terms and, of course, to employ the correct instruments — an enforceable pledge or a contract to make a will. Either can bear any name. The name I prefer is simply “Gift Agreement”.

BTW, neither an enforceable pledge nor a contract to make a will guarantees that your organization will get a single dime from the donor’s estate. The donor may die broke, for example.

by Jon Tidd, Esq

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