In re Estate of Geary
| Citation | 275 S.W.3d 835 |
| Decision Date | 29 February 2008 |
| Docket Number | No. W2007-00958-COA-R3-CV,W2007-00958-COA-R3-CV |
| Parties | In the Matter of the ESTATE OF James F. GEARY, Deceased. James Samual Geary v. Connie S. Geary. |
| Court | Court of Appeals of Tennessee |
Besty Hesselrode and Jeff Mueller, Jackson, TN, for Appellant.
R. Bradley Sigler, Charles Exum, Jackson, TN, for Appellee.
This appeal involves a petition to construe a will and ademption by extinction. The decedent had a non-retirement cash brokerage account that contained four municipal bonds worth approximately $340,000. Five percent of the account was held in mutual funds and cash. The decedent executed a holographic will that included a specific bequest of the contents of the brokerage account to his wife. The will identified the account by its account number and brokerage firm, and it specifically described the contents of the account being bequeathed to the wife. After the decedent executed the will, his brokerage firm assigned a new account number to his brokerage account. The decedent subsequently arranged an "in-kind" transfer of all the contents of the account to another brokerage firm. The contents of the new account were the same as the contents of the old account: the same four municipal bonds and a small amount of cash and cash equivalents. When the decedent died, he was survived by his wife and his son from a previous marriage. The son contended that because the brokerage account number named in the will held no assets, the bequest was extinguished. He argued that the brokerage account with the new brokerage firm should pass by intestate succession, and therefore he should receive seventy percent of the asset. The probate court held that the change in account number and broker did not materially change the subject of the specific bequest, and therefore the wife was entitled to the contents of the brokerage account. The son appeals. We affirm.
James F. Geary (the "Decedent") executed a valid holographic will1 on or about August 6, 2003. The will is entirely handwritten and consists of twelve pages, providing, in relevant part:
Last Will and Testament of James F Geary
Be it known that I James F Geary a Resident of Jackson, County of Madison, in the State of TN, Being of sound mind, do make and declare this to be my Last Will and Testament.
...
...
To my love of my life, my wife Connie S Geary I love you sweetheart. And Im waiting until we can be together again. I leave the following:
...
2. The entire contents of Acct No. FC1-191957 with AmSouth Investments I give to you my Love Connie S. Geary and trust that you will arrange for the following.
A. Municipal Bond fund which represents 95% of the entire account valued at $340,000 will continue to pay mo.ly interest (tax free) of $1400 a mo. until you pass on. The actual bonds maturity date is 2017 which means you will have to reinvest the $340,000 in new municipal bonds to continue receiving the $1400/mo. Bobby Hearn and or Billy Hopkins can set this up for you.
When you make your will out you will have to bequest these bonds to some one. By the time that you will have to make the decision you will know who should get them. (who needs them the most) once again Jimmy may need the most assistance due to his med. prob.'s that is of course if he is not a millionaire by then!
In any case who ever gets them should know that I busted my ass for 30 yrs to put that money away. The bottom line is what ever you decide its ok with me.
B. The Cash and mutual funds in this acct FC1-191957 are worth about $20,000 you could ear mark this money to pay for your funeral costs. if you want and put it in your will so the kids will know. thats what you want.
The will also included other bequests of various accounts to Mrs. Connie S. Geary, and it included a table that estimated the monthly income Mrs. Geary would receive from each account. The table listed the "Municipal Bond Fund" with an estimated monthly income of $1400. The will further provided:
P.S. Stay with this plan. Don't let any one talk you out of it or persuade you to do other kinds of investing. Lets play it safe ok!
And as far as the kids are concerned-well I guess they are just going to have to wait. Besides by that time they probably won't need it anyway—
We made our way just fine with out financial help from our parents and so will they. My only real concern is that if and when Jimmy's hip is gone. He can still live well and not go with out. And Im sure you'll make the right choices—when the time comes. for you to write one of these—wills—
The Decedent bequeathed other items to his only child, James S. ("Jimmy") Geary, to his step-daughter, and to other friends and relatives.
In August of 2003, when the Decedent executed his will, he held a non-retirement cash brokerage account with AmSouth Investment Services, Inc. ("AmSouth"), which was designated account number FC1-191957. Mr. Bobby Hearn was the Decedent's investment broker at AmSouth, and he testified at trial about the Decedent's investment portfolio. Ninety-five percent of the Decedent's account was comprised of the following four individual municipal bonds:
Tennessee Housing Dev. Agency # 880459CQ3 $65,000
Shelby County, Tennessee # 821686JD5 100,000
Shelby County, Tennessee # 821692PZ7 75,000
Shelby County, Tennessee # 821697SU42 100,000
Three percent of the account was comprised of a mutual fund investment, and two percent was made up of cash and cash equivalents.
AmSouth's clearing and reporting services were initially provided by a broker/dealer named National Financial Services, LLC. In other words, the Decedent's bonds in account number FC1-191957 were held in custody by National Financial Services, for the benefit of the Decedent. On or about December 5, 2003, AmSouth made the decision to change broker/dealers from National Financial Services to Pershing, LLC. The assets held by National Financial Services were wired or transferred in-kind to Pershing. However, the assets were not changed, and the four individual municipal bonds remained the same. Pershing had its own system of account numbers, and the Decedent's AmSouth account was given a new account number of 4W0-058103. Customers were notified of the change, but they had no choice in the matter unless they wished to close their account with AmSouth.
On September 30, 2004, the Decedent transferred the assets in account number 4W0-058103 from AmSouth to another brokerage firm, William E. Hopkins & Associates, Inc. ("Hopkins"). Hopkins uses Sterne, Agee Capital Markets, Inc., as their broker/dealer, and the Decedent's assets were designated as account number 54293077. Apparently, the Decedent was offended when his AmSouth investment broker obtained the Decedent's credit report and approached him about obtaining a mortgage loan, when the Decedent's house was already paid for. The Decedent had developed a close relationship with the president of Hopkins, Mr. William "Billy" Hopkins. The Decedent was a karate teacher, and Mr. Hopkins was one of his students. The Decedent approached Mr. Hopkins and asked him about transferring the contents of the AmSouth account, "exactly as it was," to Mr. Hopkins' brokerage firm. Mr. Hopkins arranged an in-kind transfer of all the contents of the AmSouth account (number 4W0-058103) to an account with Hopkins. According to Mr. Hopkins, "everything was transferred exactly as it was," and only the Decedent's brokerage agent changed. Mr. Hopkins testified about the transaction as follows:
Q. Now, this account transfer form. Let's go over this. It shows and I've got this highlighted. It shows transfer type, brokerage change.
A. Yes.
Q. Expand on that a little bit?
A. Okay. Basically what we were requesting was that we didn't want to liquidate the account. We simply wanted to move the account to where we could work with [the Decedent] on his account, but nothing would be changed.
Q. You could service the account?
A. We could service, but basically it would just stay intact.
[The Court]: Otherwise, you've got to pay taxes on it.
A. Absolutely.
If the account had been liquidated, AmSouth would have moved "in essence, a check[,]" over to Hopkins. However, in this case, the bonds and other assets were simply transferred. The Hopkins account then held the four municipal bonds along with a small amount of cash and cash equivalents. These assets remained intact until the Decedent died, as he never changed his investment portfolio.
The Decedent passed away on December 7, 2005, at the age of 55. Letters of Administration were issued to Mrs. Geary on January 30, 2006, and she was appointed executrix of the Decedent's estate. The Decedent's holographic will was admitted to probate, and Mrs. Geary filed a petition to construe the will raising questions regarding various provisions. Relevant to this appeal, Mrs. Geary contended that she was entitled to the four municipal bonds the Decedent owned based upon the following provision of the will:
To my love of my life, my wife Connie S Geary I love you sweetheart. And Im waiting until we can be together again. I leave the following:
...
2. The entire contents of Acct No. FC1-191957 with AmSouth Investments I give to you my Love Connie S Geary and trust that you will arrange for the following.
A. Municipal Bond fund which represents 95% of the entire account valued at $340,000 will continue to pay mo.ly interest (tax free) of $1400 a mo. until you pass on. The actual bonds maturity date is 2017 which means you will have to reinvest the $340,000 in new municipal bonds to continue receiving the $1400/mo. Bobby Hearn and or Billy Hopkins can set this up for you....
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Foertsch v. Foertsch (In re Estate of Foertsch)
...funds in total to a different brokerage firm to follow the broker with whom he had a lengthy relationship. Cf. In re Estate of Geary, 275 S.W.3d 835, 843 (Tenn. Ct. App. 2008) (holding specific bequest of an investment account identified by account number and brokerage firm was not adeemed ......