COA: Moving account to new brokerage doesn’t change bequest

The Indiana Court of Appeals on Thursday rejected a widow’s appeal that sought to declare her late husband’s investment account extinct because it had been moved to a new brokerage, but the move had not been amended in his will.

Spencer County businessman Mason Foertsch in 2005 executed a will that bequeathed to his grandsons David, Brian and Marcus Foertsch, the balance of an investment account. After the grandfather’s death in June 2015, a question arose about assets in the estate valued at about $750,000.

Debra Foertsch, Mason’s wife, administered the account and, during her lifetime, would receive the greater of the net income generated by the trust or $84,000 a year. In 2016, the estate’s personal representative filed a petition for clarification, seeking to declare the account in question adeemed by extinction, because a transfer to a new broker had not been included in Mason’s will.

The trial court refused, as did the Indiana Court of Appeals. In a footnote, the COA observed, “Presumably, Debra was in favor of ademption because if the trial court had so found, the money in the Raymond James account (approximately $750,000 according to a November 2015 inventory of estate assets) would … be paid to Debra.” If not, she would receive only her lifetime share, with the remainder paid to Mason’s grandsons upon her death.

“Decedent’s intent at the time of executing his will and the Second Codicil was to provide from his investment account for his wife during her lifetime and for his grandsons after her death. The place

where the investment account was located was not the critical factor – the investment funds were,” Judge Margret Robb wrote for the panel in In re The Estate of Mason R. Foertsch, Debra S. Foertsch v. Marcus Foertsch, David Foertsch, and Brian Foertsch,74A05-1702-ES-375.

“Decedent’s broker testified that Decedent was an astute businessman who was active in communicating with his broker and curating his investments, presumably for the benefit of himself and his heirs pursuant to the terms of his will. … Accordingly, we hold the specific bequest of ‘any and all funds at Merrill Lynch’ changed only in form and not in substance when Decedent moved his Merrill Lynch investment account, in total and in kind, to a new brokerage firm where he continued to administer the account as he had before,” Robb wrote. “Therefore, the trial court did not clearly err in finding the bequest was not adeemed and ordering the personal representative to proceed with making distributions from decedent’s estate on this basis.”