## Facts

- Abraham Hillowitz participated in an investment club treated as a partnership.
- The partnership agreement provided that upon a partner’s death, the partner’s share would transfer to the partner’s wife without terminating the partnership.
- After Hillowitz died, the partnership paid about $2,800 (his partnership interest) to his widow pursuant to the agreement.
- Hillowitz’s executors petitioned to bring the partnership interest into the probate estate, arguing the clause was an invalid testamentary disposition because it did not satisfy statutory will-execution requirements.
- The widow argued the transfer was enforceable as a contractual arrangement in the partnership agreement.

## Issues

1. Whether a partnership agreement provision directing payment or transfer of a partner’s interest to a designated beneficiary at death is enforceable as a contract despite noncompliance with the Statute of Wills.

## Decision

- The Court of Appeals reversed the Appellate Division and reinstated the Surrogate’s Court’s result.
- The court held the partnership provision was valid and enforceable as a contract benefiting a third party.
- The transfer was not invalid merely because it took effect at death and did not comply with will formalities.
- The executors’ effort to treat the partnership interest as part of the probate estate was denied.

## Legal Principles

- A contract may validly provide for a payment or transfer at death without becoming a testamentary disposition governed by the Statute of Wills.
- A partnership agreement can operate as a third-party beneficiary contract that transfers a deceased partner’s interest to a named beneficiary.
- Such a provision is enforceable when it is part of a genuine contractual/business arrangement supported by consideration, rather than a sham device solely to avoid will formalities.
- Courts may treat legitimate nonprobate transfer mechanisms (including business agreements) as enforceable will substitutes when grounded in inter vivos contractual obligations.

## Conclusion

A partnership agreement directing that a deceased partner’s share be paid or transferred to the partner’s spouse may be enforced as a contractual, nonprobate transfer; it is not rendered void for failure to satisfy will-execution requirements when it reflects a bona fide business arrangement.


In re Estate of Hillowitz, 22 N.Y.2d 107, 238 N.E.2d 723 (N.Y. 1968)