In re Estate of Rupley (IN)

Summary: Transfer on Death Property Act applies retroactively to promissory note that contained a transfer on death provision.


In re Estate of Rupley, 18 N.E.3d 291 (Ind. App. 2014).


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Facts: In March 2006, Charles A. Rupley and his mother, Ruth Rupley, executed a promissory note in which Charles borrowed $72,500 from Ruth. The note stated that it "is payable on death to Charles A. Rupley." Ruth died in October 2008.

Charles and his brother, Michael, were appointed co-personal representatives of Ruth's estate. Michael filed a Petition Requesting Instructions as to whether the note balance: 1) transferred to Charles at Ruth's death, 2) is an asset of Ruth's estate; or 3) was forgiven by Ruth upon her death.

At a hearing on the petition, Charles argued that the Indiana Transfer on Death Property Act applied retroactively to the note and pursuant to the Act, the transfer on death provision in the note transferred it to Charles when Ruth died. Michael argued that the Act does not apply retroactively and the note was an invalid attempt to make a testamentary transfer.

The trial court ordered that the note was included as an asset of Ruth's estate. Charles appealed and the appellate court found that the Transfer on Death Property Act applied retroactively and thus reversed the trial court's order. Michael petitioned the appellate court for rehearing of its decision to reverse the trial court. The appellate court granted rehearing with the purpose of clarifying its application of the Transfer on Death Property Act.


Holding: Affirmed.  In the appellate court’s original decision, it was determined that the promissory note was not an asset of the estate because the Transfer on Death Property Act, enacted in 2009, applied retroactively to the note. In its decision, the court characterized the note as a “pay on death account” and thus the Act applied retroactively. At rehearing, Michael argued that the note could not be a “pay on death account” because it is an account, and an account is a contract of deposit of funds between a depositor and financial institution. Moreover, because no financial institution was involved in the promissory note, it could not be a “pay on death account”. The court held that the promissory note was more accurately characterized as a “transfer on death security” to which the Act applies. Therefore, the court reaffirmed its original opinion.


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By: ATG Underwriting Department | Posted on: Wed, 01/20/2016 - 12:40pm