Background
Lois Sherbert Shooter executed a will in November 2018 that included a specific bequest of her “Raymond James and Associates account ending in ****M386” equally to Gail Friedman, John Jay Shooter, and Bill R. Sherbert (or their descendants per stirpes). The residuary clause left the remainder of her estate to Bill R. Sherbert and his descendants.
In January and February 2022, Lois transferred the Raymond James account to LPL Financial (a custodian for Silverleaf Wealth Management), transferring all assets in kind. Critically, when she opened the LPL account, she designated it as a “Transfer on Death” account and named her brother Bill Sherbert as the sole beneficiary. Lois did not amend her will following this transfer. Bill Sherbert predeceased Lois in April 2023, about two months before Lois died on June 13, 2023. The residuary beneficiaries are Lois’s nieces, daughters of Bill Sherbert, including the estate’s executrix Adrienne Murphrey.
Appellants (Gail Friedman, Jesse Shooter, and Rachel Tamura—grandchildren and descendants of Lois’s stepchildren) sued for a declaration that the LPL account passed under the specific bequest in Article II.B rather than through the residuary clause. They argued the in-kind transfer to a new custodian did not destroy the specific gift.
The Court’s Holding
The trial court found the Raymond James account “ending in ****M386” did not exist at Lois’s death because it had been transferred to LPL and closed. The will’s language—”no such gift shall be made if such account does not exist on the date of my death”—meant the specific bequest failed. The trial court also noted that Lois’s will itself acknowledged the account might pass outside the will if it had a beneficiary designation. Since the LPL account had a named beneficiary (Bill Sherbert), and he predeceased Lois, the TOD designation failed and the account passed into the residuary estate by operation of law.
On appeal, appellants argued the trial court erred in holding that the account “did not exist” and wrongly applied ademption doctrine. They contended that moving securities between custodians was merely administrative and did not defeat the intent to transfer the specific assets to them. The appellate court affirmed on procedural grounds: appellants challenged only one of two independent grounds supporting the trial court’s judgment (that the Raymond James account did not exist) and failed to challenge the alternative ground (that the TOD beneficiary designation took precedence). Under Texas appellate procedure, failure to challenge all independent grounds supporting a judgment requires affirmance.
The court noted that even on the merits, the trial court’s findings were supported by the evidence. The will text was unambiguous: it expressly conditioned the specific bequest on the Raymond James account’s existence at death and acknowledged accounts might pass outside the will through beneficiary designations.
Key Takeaways
- A specific bequest of an identified account fails if that exact account no longer exists at the testator’s death, even if similar assets have been transferred to a successor account.
- When a testator transfers an account to a new custodian and designates it as a “Transfer on Death” account with a named beneficiary, that TOD designation can override the will’s provisions and take the account outside the probate estate.
- On appeal from a bench trial, appellants must challenge all independent grounds supporting the trial court’s judgment or the judgment will be affirmed based on the unchallenged ground.
- Will language acknowledging that an account may pass outside the will through beneficiary designations will be enforced even if the testator later establishes such a designation.
Why It Matters
This decision underscores the critical importance of updating a will when transferring titled or accounts between custodians. Even in-kind transfers—which move the same securities without changing ownership—can have dramatic consequences for estate distribution if the will contains a specific bequest tied to an account’s existence. The case also illustrates the power of TOD designations and beneficiary-on-death arrangements; they operate outside the will and override probate provisions, making them a form of non-probate transfer that can inadvertently defeat a testator’s documented wishes.
For practitioners, the decision serves as a cautionary tale about the intersection of will provisions acknowledging non-probate transfers and actual beneficiary designations. Lois’s will explicitly contemplated that her account might pass via beneficiary designation, yet she failed to coordinate that language with her specific bequest or to update the will when she actually established a TOD account. The appellate court’s procedural holding—requiring appellants to challenge all independent grounds—also reinforces that appellants bear the burden of presenting a complete attack on a trial court’s judgment.