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The Uniform Probate Code defines the term "security" as: "Security" includes any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease, collateral trust certificate, transferable share, voting trust certificate, or in general, any interest or instrument commonly known as a security, or any certificate of interest or participation, any temporary or interim certificate, receipt or certificate of deposit for, or any warrant or right to subscribe to or purchase, any of the foregoing. Minn. Stat. § 524.1-201(37) (1986).
Article III of the testator's will provided that her capital stock in a corporation would go to her trustees to distribute to her two friends. The will also provided that upon the death of the survivor of the two friends, the stock would go to a college. As the result of a merger, the corporation in which decedent had stock approved a reversed stock split in which it made payments to all remaining shareholders on each stock held. Prior to her death, decedent tendered several thousand shares and received cash in exchange. Following her death, her personal representative surrendered certificates that the testator held in her safe deposit box. The personal representative filed a petition with the probate court that requested a determination of whether ademption had occurred with respect to the bequest made in the testator's will. At a hearing the lower court concluded that ademption had occurred pursuant to Minn. Stat. § 524.2-607 (1986).
Was the decedent's devise of capital stock and the income therefrom adeemed by a reverse stock split?
The court affirmed in part, reversed in part, and remanded. The court stated that the stocks found at decedent's death were securities under the Uniform Probate Code. They were evidence of indebtedness. Although the amounts have already been paid over to an escrow account, they were still an outstanding indebtedness from the perspective of the testator until they were redeemed. For this reason, the court concluded that the of those stocks did not occur under § 542.-607.