Before Steadman, Glickman and Washington, Associate Judges.
The opinion of the court was delivered by: Glickman, Associate Judge
Appeals from the Superior Court of the District of Columbia (Hon. Kaye K. Christian, Trial Judge)
The legatees of a specific bequest in the will of Genevieve I. Wheeler appeal from a decision of the probate court that the bequest failed by ademption, the doctrine that a legacy of a specific asset is extinguished if the asset no longer exists at the time of the testator's death. The question presented is whether Wheeler's bequest of her investments under a retirement plan offered by her employer adeemed because, upon her retirement, she "rolled over" those investments into an Individual Retirement Account (IRA) without revising the terms of her will to reflect the rollover. The probate court held that the rollover extinguished the specific bequest, leaving the IRA to be distributed to the residuary legatees. We reverse. We hold that the rollover did not trigger ademption.
Genevieve I. Wheeler died testate on March 25, 1996. In her will of October 8, 1994, Wheeler sought to dispose of her estate through a series of specific devises and bequests. In addition to making gifts of her home, other real estate, and the funds in three specifically identified bank accounts, Wheeler bequeathed "any rights and interest in my pension from Quota International, Inc." (her then employer) to her sister-in-law Celeste Johnson, her nieces Chryssie Morris and Celeste Wellington, and her parish priest Father Michael P. O'Sullivan.*fn2 The will contains a residuary clause bequeathing all the remainder of her property to three friends, Mary Jo Daugherty, Romellia Johnston and appellee Jasmin Ponti.*fn3 Each of the residuary legatees is also the beneficiary of a specific gift in the will.*fn4
Extrinsic evidence established, and it is undisputed, that when Wheeler prepared her will, her "pension from Quota" consisted of her accumulated investments made pursuant to a "defined contribution retirement plan" offered to employees of Quota by the American Society of Association Executives (ASAE). The ASAE plan was administered by Fidelity Investments. The trustee of the ASAE plan was subject to change from time to time; initially the trustee was Citizens Bank of Maryland, but later Fidelity Investments replaced Citizens Bank as trustee. Wheeler was 100% vested in the plan. Thus the term "pension from Quota" is somewhat misleading, for it appears Quota had no control over the funds that it contributed and had no obligation itself to pay or otherwise fund a pension to Wheeler after she retired. Quota was merely the original source of the monies that were contributed (e.g., by Quota directly or by Wheeler as a deduction from her pay) and invested with Fidelity for Wheeler's retirement.
Shortly after she made her will, Wheeler retired, and in April 1995 she undertook to transfer her Fidelity investments under the ASAE plan into a rollover Individual Retirement Account (IRA) at Crestar Bank. Wheeler completed this transfer in early August 1995. The record indicates that at this time Wheeler's Fidelity investments totaled $164,305.60, almost all of which was in a "fixed income option," with a small balance in a "disciplined equity" fund. The entire amount was withdrawn. A small after-tax portion amounting to $2,245.45 was distributed directly to Wheeler; all the rest, totaling $162,060.15, was deemed "eligible for rollover" and transferred directly to the Crestar Bank IRA. In the IRA this money was allocated among several bond, equity or cash funds.
Wheeler did not amend the provisions of her will to reflect this rollover, and she did not designate beneficiaries of the IRA when she opened the account at Crestar or at any point thereafter. Upon her death in March 1996, the bulk of the transferred funds, totaling $157,101.51, were still intact in the IRA.
In the probate court, the personal representative of the estate sought judicial authorization to distribute Wheeler's IRA funds (subject to payment of income tax) to appellants, the persons named in the will as legatees of the "pension from Quota." Appellants likewise asked the probate court to declare them entitled to receive the IRA funds.
Appellee Jasmin Ponti, one of the three residual legatees, opposed these requests. (The other residuary legatees took no position.) Ponti contended that Wheeler had terminated the existence of her "pension from Quota" prior to her death when she transferred her retirement funds from the Fidelity investments under the ASAE retirement plan into the rollover IRA. Arguing that the IRA was not the same asset as the "pension from Quota," and hence not the subject of any specific bequest in the will, Ponti asked that the funds in the IRA be distributed to her and the other residuary legatees.
Against this contention the personal representative argued that the IRA was "the same retirement asset with a mere change of custodian and location. Moving the asset from the Quota plan to the Crestar IRA was not a change of the substance, character or nature of the asset." The "pension from Quota" legatees argued, similarly, that the reference in the will to a pension "from Quota" was merely Wheeler's "shorthand designation for the full amount of all decedent's pension or retirement funds wherever maintained rather than a bequest limited to whatever funds would be found or remain in a specific institution or place at the time of her death."
The probate court found that Wheeler's bequest of her "pension from Quota" was a specific legacy subject to the doctrine of ademption, "whereby the non-existence of a specific asset described in a will, at the time of testator's death, operates to extinguish that bequest" regardless of the actual intentions of the testator. Finding no provision in Wheeler's will for a substitute bequest in the event the "pension from Quota" had been "transmuted or liquidated," the probate court ruled that the gift was adeemed by Wheeler's transfer of "all funds in the Quota International account to the Crestar Bank IRA account." In reaching this conclusion - which meant that the funds in the IRA were distributable to the residuary legatees - the probate court did not explain why it considered the rollover to have extinguished the existence of the "pension from Quota" in Wheeler's estate. The court acknowledged but did not explicitly address the personal representative's ...