Potter v. Potter

Denise Potter et al. v. Ruby Potter, Case No. 671, 2018 Term Opinion by Kehoe, J. The Maryland Limited Liability Company Act — Membership Interest in a Limited Liability Company — Definition of “Property” for the purposes of Maryland’s Estates and Trusts Article. A membership in a Maryland limited liability company is an interest in property that is subject to the provisions of Maryland’s testamentary and probate laws. Md. Code, Est. & Trusts § 1-102(r). The Maryland Limited Liability Company Act — Operating Agreements — Provisions Relating to Ownership of a Member’s Interest Upon Death of the Member — Compliance with Md. Code, Est. & Trusts § 4-102 A provision in the operating agreement of a Maryland limited liability company that purports to “automatically and immediately” transfer a member’s interest to a designated successor upon the member’s death is not effective unless the operating agreement was executed in accordance with the provisions of Maryland’s statute of wills, which is codified as Md. Code, Est. & Trusts § 4-102.

Circuit Court for Anne Arundel County Case No. C-02-CV-17-003225 REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 671 September Term, 2018 ____________________________________ DENISE POTTER, ET AL. v. RUBY POTTER ____________________________________ Wright,* Graeff, Kehoe, JJ. ____________________________________ Opinion by Kehoe, J. ____________________________________ Filed: May 26, 2021 *Wright, J., now retired, participated in the hearing and conference of this case while an active member of the Court. After being recalled pursuant to Maryland Constitution, Article IV, Section 3A, he participated in the decision and adoption of this opinion. **Ripken, J. did not participate in the Court’s Pursuant to Maryland Uniform Electronic Legal decision to report this opinion pursuant to Materials Act (§§ 10-1601 et seq. of the State Government Article) this document is authentic. Maryland Rule 8-605.1. 2021-05-26 15:21-04:00 Suzanne C. Johnson, Clerk 2 In Maryland, and as a general rule, a document that transfers title to property upon the death of its owner must be executed in accordance with our version of the statute of wills, which is codified as Md. Code, Est. & Trusts § 4-102. There are exceptions; some are based on common law principles, and others established by statute.

The issues in the present appeal revolve around whether § 4-102 applies to a document purporting to transfer a member’s interest in a Maryland limited liability company at the time of the member’s death. James Potter owned an interest in a Maryland limited liability company. The members of the company agreed among themselves as to who should receive each individual member’s interest upon the death of that member. Mr. Potter passed away.

There was a dispute as to whether his interest passed to the individual designated in the company’s documents or to his estate. The controversy eventually came before the Circuit Court for Anne Arundel County and that court concluded that the membership interest passed to the designee. The personal representative of Mr. Potter’s estate has appealed and presents one issue that we have reworded: Is a provision in a limited liability company operating agreement that purports to transfer a member’s economic interest at death enforceable even though the agreement was not executed with the formalities required in -1- Maryland for the execution of a will?[1] Because our answer is no, we will reverse the circuit court’s judgment and remand this case for further proceedings. Background All of the individuals who played a role in this case have or had the surname of “Potter.” To avoid confusion, we will refer to them by their first names.

We mean no disrespect. The facts are not in dispute. James married Ruby Potter in 1984. Sometime thereafter, he acquired a membership interest in TR Steak Pasadena, LLC, a Maryland limited liability company.

James’s rights and obligations as a member of the company were defined by various documents that were amended over time. The relevant ones are TR Steak’s Third Amended Operating Agreement (the “operating agreement”) and the company’s Third Amended Members’ Agreement (the “members’ agreement”), both of which were executed on August 7, 2012. Pertinent to the issues before us, the operating agreement distinguishes between a member’s “interest,” which is defined as “a person’s share of the profits and losses of, and the right to receive distributions” from the company, and a member’s “rights,” which are 1 The appellant’s version of the issue is: Can an LLC membership agreement, which does not comply with Estates & Trusts § 4-102, pass property at death? -2- the rights of a member to participate in the management and control of the company.2 The operating agreement provides that, if a member dies, his or her “living trust, estate, legatee or other successor in interest” will “automatically and immediately” become a “Successor Member” as long as the successor is a member of the “Permitted Group,” as defined in the members’ agreement. The members’ agreement stated that James was one of eleven members of the company, and owned eight of the 100 outstanding “membership interest units.” The agreement recited that it was in the best interest of the company and the members to make provisions for a variety of aspects of the company’s ownership and management, including the disposition of a membership interest upon the death of a member.

Although the operating agreement states that the members’ agreement contains a definition of “Permitted Group,” the latter document does not. Nonetheless, the members’ intentions are clear. The members’ agreement states in pertinent part: Upon the death of a Member, all of the Membership Interests of the Company owned by him shall be transferred as shown below for each Member with the voting rights attached to their Membership Interests being assigned to the Member shown. 2 Although the terminology is different, the distinction that the TR Steak documents draw between a member’s right to receive a pro rata share of the company’s profits and losses and her right to participate in the management and operation of the enterprise is consistent with Maryland’s Limited Liability Company Act. See Md. Code, Corps & Ass’ns § 4A-101(i) (defining “economic interest”), (n) (defining “membership interest”); and (o) (defining “noneconomic interest”). -3- Immediately after this paragraph, Ruby was designated as the “successor” to James’s membership interest, that is, his right to share in the profits, losses and distributions from the company.

James’s membership voting rights were assigned to two of the other members of the company. Copies of the operating agreement and the members’ agreement are in the record. James’s signature on the operating agreement was not witnessed. His signature on the members’ agreement appears to have been witnessed by one individual, but the signature is indecipherable and the witness is otherwise unidentified.

James and Ruby separated in 2016 and soon thereafter signed a separation agreement. The agreement contained two relevant provisions. The first was a mutual and general assignment and release of “any and all rights or interest which [the releasing party] now has or may hereafter acquire in the real, personal or other property of the other.” The assignment and release were coupled with a promise to execute and deliver any “deeds, releases, quit claims or other instruments as from time to time may be necessary or convenient to enable the other party to deal with his property as if he were unmarried.” The second provision related specifically to James’s interest in TR Steak. Ruby waived “any and all interest” in James’s membership interest in the company and promised that James “shall maintain his shares/membership interest[] . . . free and clear of any rights, title or interest” that could be asserted by her.

However, whether by oversight or design, James never changed his designation of Ruby as the transferee of his interest. -4- Subsequently, James married Denise. In 2017, he died intestate. Denise opened a small estate in the Orphans’ Court for Anne Arundel County and was appointed as personal representative. In a document filed in the orphans’ court, Denise identified James’s membership interest in TR Steak as an asset of the estate.3 About six months later, Ruby filed a complaint for a declaratory judgment in the Circuit Court for Anne Arundel County against Denise, both individually and in her capacity as the personal representative of James’s estate.4 Ruby asserted that she was entitled to James’s membership interest in TR Steak because she was listed as his successor in the members’ agreement.

Denise responded that the membership interest was an asset of James’s estate because the relevant limited liability company documents could not, as a matter of law, pass title because they did not comply with the requirements of Est. & Trusts § 4-102, the Maryland statute of wills. 3 In her orphans’ court filing, Denise described the asset in question as “TR Steak Pasadena, LLC Shares.” That language notwithstanding, neither party asserts that James’s membership rights, that is, his right to participate in the management of the limited liability company, is a probate asset. The sole issue before us is whether his membership interest, i.e., his right to share in profits and losses of the Company, is an asset of the estate. 4 TR Steak was designated as an “interested person” in Ruby’s complaint. It is our understanding from the record that the company has taken no position as to whether James’s interest belongs to Ruby or to his estate. TR Steak has been holding monetary distributions associated James’s interest in escrow and will distribute them to the prevailing party in this litigation. -5- The parties filed motions for summary judgment.

The relevant arguments raised to the circuit court are the same as the ones presented to us and we will discuss them presently. After a hearing, the circuit court granted Ruby’s motion and denied Denise’s. In an opinion delivered from the bench, the court concluded that there were no factual disputes between the parties. The court framed its legal analysis primarily in terms of the proper interpretation of the operating agreement when it was read in conjunction with the members’ agreement and the separation agreement.5 As to the separation agreement, the court decided that its legal effect was to give James the “absolute free will” to terminate Ruby’s expectancy interest but that James “either chose not to do [so] or overlooked that 5 Some of the terminology used by the circuit court and the parties is imprecise.

The court referred to the instrument under which James’s membership interest was held for the purposes of Est. & Trusts § 1-102(r) as the “membership agreement.” At places in their briefs, the parties do as well. However, it is clearly the operating agreement that defined James’s interest, stated that he owned eight membership units, and, most importantly, provided that the designee of a deceased member “automatically and immediately” became a successor member, subject to the proviso that the designee needed to be a member of the “Permitted Group” defined in the members’ agreement. The relevant function of the members’ agreement was to identify members of the Permitted Group. Certainly, the two documents were intended to be read together, but the critical document in this case is the operating agreement. -6- fact that it would have been incumbent upon him to do it.”6 Relying in large part on the Court of Appeals’ analysis in Painewebber v. West, 363 Md. 408 , 419–21 (2001), the court then reasoned that the terms of the separation agreement did not constitute a waiver of Ruby’s rights under the members’ agreement.

Finally, the court concluded that because the members’ agreement was “a contract where benefits can pass by way of death” the issue of whether it was “a testamentary instrument really is immaterial.” The court entered judgment accordingly and Denise filed this appeal. The Standard of Review A party is entitled to summary judgment when there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Md. Rule 2-501(a). In the present case, neither Denise nor Ruby suggests that there are disputes as to material 6 In saying that James had “absolute free will” to change his designated successor, the circuit court may have been overstating things a bit.

The court was certainly correct that Ruby had no right to object to or otherwise interfere with James’s decision to change his designee. But the members’ agreement did not contain a provision by which a member could change his or her designated successor. Thus, based on the documents in the record, it appears that the only way that James could have designated a new successor upon his death would have been through an amendment to the members’ agreement itself, which required the consent of all members. Of course, this does not preclude the possibility that there is another agreement between the members regarding changing designees or that consent would not have been readily forthcoming from James’s fellow members had he asked for it.

Because the issue was not presented to the circuit court in the first place and neither party challenges this aspect of the court’s ruling, we will assume for purposes of analysis that the circuit court’s “absolute free will” characterization was correct. -7- facts. Therefore, our role is to review the circuit court’s legal analysis de novo to decide whether it was correct. See K. Hovnanian Homes of Maryland v. Mayor of Havre de Grace, 472 Md. 267, 285 (2021); Koste v. Town of Oxford, 431 Md. 14, 25 (2013). As we have explained, the circuit court construed the separation agreement to give James “absolute free will” to change the assignee of his membership interest in the event of his death.

The court also decided, based on the undisputed facts and the language of the separation agreement, that Ruby had done nothing to waive or release her right to enforce the agreement. Denise does not challenge these aspects of the court’s reasoning on appeal. Therefore, for purposes of our analysis, we will assume that the court’s conclusions are correct. This leaves us with the third aspect of the court’s decision.

Although its explanation of its reasoning was not expansive, we believe, as do the parties, that the circuit court read the relevant provisions of the Limited Liability Company Act to authorize members of limited liability companies to enter into agreements that pass title to a member’s interest at death. Therefore—and again, we are reading between the lines of its decision—the court reasoned that the State’s statutory requirements for the execution of wills and the administration of a decedent’s property do not apply to James’s membership interest in the limited liability company. Such reasoning, or something very close to it, must have been the basis for the court’s conclusion that whether the members’ agreement was testamentary was irrelevant to its analysis. -8- The Parties’ Contentions In framing the parties’ contentions, we start with some statutory context. As a general rule, in this State, all “property of a decedent shall be subject to the estates of decedents law.” Md. Code, Est. & Trusts § 1-301. “Property” is a defined term in the Estate and Trusts Article.

See Est. & Trusts § 1-101(r).7 We will discuss § 1-101(r) in detail later; at this point, it’s sufficient to say that for the purposes of Maryland’s testamentary and probate law, “property” includes any interest that a decedent has in real or personal property “which does not pass, at the time of the decedent’s death, to another person by the terms of the instrument under which it is held, or by operation of law.” Id. Maryland’s statute of wills is codified as Est. & Trusts § 4-102. It states in pertinent part: (a) Except as provided in §§ 4-103 and 4-104 of this subtitle,[8] every will shall be: 7 Est. & Trusts § 1-101 states in pertinent part: (a) In the estates of decedents law the following words have the meanings indicated. * * * (r)(1) “Property” includes both real and personal property, and any right or interest therein. (2) “Property” refers to: (i) All real and personal property of a decedent; and (ii) Any right or interest therein which does not pass, at the time of the decedent’s death, to another person by the terms of the instrument under which it is held, or by operation of law. 8 Est. & Trusts §§ 4-103 and 4-104 pertain respectively to holographic wills executed by individuals in military service and wills executed outside of the State of Maryland. -9- (1) In writing; (2) Signed by the testator, or by some other person for the testator, in the testator’s presence and by the testator’s express direction; and (3) Attested[9] and signed by two or more credible witnesses in the presence of the testator.[10] * * * 9 The Court of Appeals recently explained that: [A]ttestation confirms that the will was executed in accordance with the requirements of ET § 4–102.

Attestation requires that the testator directly or indirectly request those persons who do attest the will to subscribe their names to it as witnesses. The testator need not formally ask the witness to sign the paper, his implied assent being sufficient. Furthermore, where the testator signs a will in front of the witnesses, proper attestation does not require that the testator inform the witnesses that they are signing a will. Nor does attestation require that the witnesses see the testator sign the will.

But, if the witnesses do not observe the testator signing the will, then the testator must acknowledge his signature before the witnesses or declare the document to be his will. Castruccio v. Estate of Castruccio, 456 Md. 1 , 18–19 (2017). 10 A capsule history of Maryland’s statute of wills can be found in Casson v. Swogell, 304 Md. 641 , 648–49 (1985). The General Assembly first enacted a statute of wills in 1798. It stated in pertinent part: All devises and bequests of any lands or tenements, devisable by law, shall be in writing and signed by the party so devising the same, or by some other person in his presence and by his express direction, and shall be attested and subscribed, in the presence of the said testator, by three or more credible witnesses, or else they shall be utterly void and of none effect.

Casson, 304 Md. at 649 (1985) (quoting Laws of Maryland 1798, ch. 101, sub-ch. 1, sec. 4). In the intervening 220 years, the only relevant substantive change to Maryland’s statute of wills is that the number of attesting witnesses has changed from three to two. - 10 - Denise contends that, with very few exceptions, it is the law of Maryland that documents having testamentary effect, that is, documents that purport to pass title to property at the owner’s death, must comply with the provisions of the Maryland statute of wills to be effective. She correctly observes that what renders a document testamentary is its effect, as opposed to its form or the parties’ subjective intent.11 Denise acknowledges that Maryland recognizes that certain kinds of documents that effect post-mortem transfers need not comply with the Est. & Trusts § 4-102. However, she argues that historically exceptions to the statute of wills were both few in number and narrow in scope.

Moreover, Denise points out that in recent years the General Assembly has codified some of several of these exceptions and established others by statute.12 In her view, the statute relied upon by Ruby, Md. Code, Corps & Ass’ns § 4A-606, is not one of them. Denise’s proposed application of these legal principles to the facts of the current case is straightforward: Because the intended effect of the relevant provisions of the operating agreement and the members’ agreement is to transfer ownership of property upon the death 11 This has been the law of Maryland for at least 160 years. See Carey v. Dennis, 13 Md. 1 , 16–17 (1859) (“[T]he cases have established that an instrument in any form, whether a deed poll or indenture, if the obvious purpose is not to take place till after the death of the person making it, shall operate as a will.” (quoting Habergham v. Vincent, 2 Ves., Jr., 231)). 12 Denise directs our attention to statutes such as: Md. Code, Ins. § 16-212 (subject to certain exceptions, the proceeds of life insurance policies are payable to the named beneficiaries), Est. & Trusts § 16-101 et seq. (transfer-on-death securities), and Md. Code, Fin.

Inst. § 1-204 (pay-on-death accounts). - 11 - of a member, the members’ agreement constitutes a testamentary instrument and must comply with Est. & Trusts § 4-102. Neither of these documents was executed in conformity with the statute. Therefore, Denise continues, those parts of the operating agreement and the membership agreement which purport to transfer ownership of an interest upon the death of a member are not enforceable. Ruby asserts that the circuit court’s decision should be affirmed.

According to her, the critical provision of the Estates and Trusts Article is Est. & Trusts § 1-101(r). She interprets that statute’s definition of “property” for the purposes of testamentary and probate law as excluding James’s limited liability company interest because it passed to her at the time of his death “by the terms of the instrument under which it is held,” namely, the operating and members’ agreements. Ruby contends that her interpretation of Est. & Trusts § 1-101(r) is supported by its legislative history. Ruby has an alternative argument.

According to her, a provision of the Maryland Limited Liability Company Act, Corps & Ass’ns § 4A-606, “expressly permits members of a limited liability company to agree that the membership agreement can control the disposition of a member’s interest upon the member’s death.” She contends that Denise “proposes a revolutionary rule that would invalidate otherwise valid contracts for including a provision controlling the disposition of a membership interest following the death of a member [and this] argument runs contrary to Maryland’s policy of freedom to contract[.]” Finally, Ruby refers us to two law review articles and the commentary of the Uniform Commissioners of Law as to the Uniform Probate Code that, in her words “reflect[] the - 12 - national consensus that transfers at death outside of the probate system are valid without complying with the wills formalities and that a statutory exception is not necessary[.]” As we will explain, Ruby’s arguments are not persuasive. James’s membership interest in TR Steak falls within the class of property interests that is subject to Maryland testamentary and probate law. There is nothing in the plain language of the Limited Liability Company Act or its legislative history that supports Ruby’s second contention. Her policy arguments are better directed to the General Assembly.

Analysis We will organize our analysis around the three issues that are at the heart of the parties’ contentions: The first is whether the operating agreement and the members’ agreement—when read together as they are clearly intended to be—are testamentary in nature, that is, whether they provide for a transfer of an interest in property to be effective at the death of the owner. Based upon our reading of the legislative history of the relevant parts of the Estates and Trust Article as well as long-settled Maryland caselaw, our answer is yes. The second question is whether Maryland law permits members of a limited liability company to agree that (i) a member’s interest can transfer at death to another by means of an agreement that does not satisfy the requirements of the statute of wills, and (ii) the deceased member’s interest will not be an asset of the member’s probate estate. Based in large part on the plain language of the relevant provisions of the Maryland Limited Liability Company Act, our answer is no. - 13 - The third issue is whether the relevant provisions of the Estates and Trusts Article and the Corporations and Associations Article can be harmonized so that “neither statute [will] be read so as to render the other, or any portion of it, meaningless, surplusage, superfluous or nugatory.” Gwin v. Motor Vehicle Admin., 385 Md. 440, 462 (2005) (cleaned up).

Our answer is yes. A When courts interpret a statute, “[o]ur chief objective is to ascertain the General Assembly’s purpose and intent when it enacted the statute.” Berry v. Queen, 469 Md. 674, 687 (2020). In so doing, we “assume that the legislature’s intent is expressed in the statutory language and thus our statutory interpretation focuses primarily on the language of the statute to determine the purpose and intent of the General Assembly.” Id. We undertake this through: an examination of the statutory text in context, a review of legislative history to confirm conclusions or resolve questions from that examination, and a consideration of the consequences of alternative readings. “Text is the plain language of the relevant provision, typically given its ordinary meaning, viewed in context, considered in light of the whole statute, and generally evaluated for ambiguity.

Legislative purpose, either apparent from the text or gathered from external sources, often informs, if not controls, our reading of the statute. An examination of interpretive consequences, either as a comparison of the results of each proffered construction, or as a principle of avoidance of an absurd or unreasonable reading, grounds the court’s interpretation in reality.” Blue v. Prince George’s County, 434 Md. 681, 689 (2013) (quoting Town of Oxford v. Koste, 204 Md. App. 578 , 585–86 (2012), aff’d, 431 Md. 14 (2013)); see also Berry, 469 Md. at 688 (“In addition to the plain language, the modern tendency of [the Court of Appeals] is - 14 - to continue the analysis of the statute beyond the plain meaning to examine extrinsic sources of legislative intent in order to check our reading of a statute’s plain language through examining the context of a statute, the overall statutory scheme, and archival legislative history of relevant enactments.” (cleaned up)). We typically identify legislative purpose by considering the language of the statute “within the context of the statutory scheme to which it belongs, considering the purpose, aim, or policy of the Legislature in enacting the statute.” State v. Johnson, 415 Md. 413 , 421–22 (2010). Additionally, “when two statutes appear to apply to the same situation, [the] Court will attempt to give effect to both statutes to the extent that they are reconcilable.” Mueller v. People’s Counsel for Baltimore County, 177 Md. App. 43, 86 (2007) (quoting State v. Ghajari, 346 Md. 101, 115 (1997)).

B We begin with Est. & Trusts § 1-301, which provides that all “property of a decedent shall be subject to the estates of decedents law.” As we have mentioned, Est. & Trusts § 1- 102(r) defines “property” to include any interest that a decedent has in real or personal property except for property “which does not pass, at the time of the decedent’s death, to another person by the terms of the instrument under which it is held, or by operation of law.” Ruby correctly asserts that the operating agreement and the members’ agreement are instruments. See Black’s Law Dictionary 952 (11th ed. 2019) (defining “instrument” as a “legal written document that defines rights, duties, entitlements, or liabilities[.]” She - 15 - contends that reading Est. & Trusts §§ 1-102(r) and § 1-301 in conjunction with one another points to the conclusion that James held his interest in TR Steak pursuant to the operating and members’ agreements and the agreements provided that his interest passed to her at the time of his death. Therefore, his membership interest did not constitute property for the purposes of Est. & Trusts § 1-301 and so are not subject to Maryland’s testamentary and probate law. According to Ruby, the circuit court was correct in characterizing as “immaterial” the fact that the members’ agreement was not executed with the formalities set out in Est. & Trusts § 4-102.

The problem with Ruby’s argument is that the relevant legislative history and caselaw indicate that the General Assembly did not intend the definition of “property” contained in Est. & Trusts § 1-102(r) to mean what she asserts it does. What are now Titles 1 through 11 of the Estates and Trusts Article were first enacted in 1969 as Article 93 of the Maryland Code. Allen v. Ritter, 196 Md. App. 617 , 626–27 (2010).13 Article 93 was passed as a result of recommendations made to the General Assembly by the Governor’s Commission to Review and Revise the Testamentary Law of Maryland. Allen, 196 Md. App. at 627–27.

The Commission had been formed by Governor J. Millard Tawes in 1965 for the purpose of providing guidance to the General Assembly regarding Maryland’s inheritance tax, probate and testamentary law. See Piper Rudnick 13 Article 93 was repealed and reenacted as Titles 1–11 of the Estates and Trusts Article in 1974. Allen, 196 Md. App. at 626 n.8. - 16 - LLP v. Hartz, 386 Md. 201, 222 (2005). The Commission—often referred to as the “Henderson Commission,” in recognition of its chair, the Honorable William L. Henderson, a former Chief Judge of the Court of Appeals—issued a series of three reports, each addressing various aspects of the tasks assigned to it.14 We are concerned with the second, which was titled Second Report of Governor’s Commission to Review and Revise the Testamentary Law of Maryland, Article 93 Decedents’ Estates (1968).

In the Second Report, the Commission recommended enacting the predecessor to what is now codified as Titles 1–11 of the Estates and Trusts Article. In its letter of transmittal to the Governor and the General Assembly, the Commission noted that “the basic thrust of the Second Report is the restatement and recodification of [Maryland’s] testamentary law.” Id. at i–ii. To that end, the Commission submitted suggested language for each section of the proposed law together with accompanying commentary.15 For these reasons, the Court of Appeals and this Court have not hesitated to look to the Second Report for insight into the proper interpretation of those parts of the Estates and A detailed history of the Henderson Commission can be found at Shale D. Stiller and 14 Roger D. Redden, Statutory Reform in the Administration of Estates of Maryland Decedents, Minors and Incompetents, 29 Md. L. Rev. 85 , 87–88 (1969). 15 The Commission did recommend changes. Most of its recommendations pertained to procedural matters but a few were substantive.

See Second Report at iii–v (summarizing recommended changes). None of the substantive changes are relevant to the issues raised in this appeal. - 17 - Trusts Article enacted at the Henderson Commission’s suggestion. See, e.g., Shealer v. Straka, 459 Md. 68 , 85–89 (2018); Kelly v. Duvall, 441 Md. 275, 283 (2015); Kortobi v. Kass, 410 Md. 168, 181 (2009); Allen, 196 Md. App. at 626–27; Russell v. Gaither, 181 Md. App. 25 , 32–33 (2008). The relevant language of what is now Est. & Trusts § 1-102(r) is substantively identical to what the Commission suggested.16 As to that statute, the Second Report stated in relevant part (emphasis added): The definition of “property” in subsection [(r)] is intended to include, and be limited to, those assets which have traditionally constituted what is sometimes called in Maryland the “probate estate”, except that realty owned by the decedent would, under the Commission’s recommendations, for the first time, also be included in the probate estate. . . .

On the other hand, “property” is not intended to include such items as insurance proceeds payable to a beneficiary other than the decedent’s estate, property held in an inter-vivos trust, property subject to a power of appointment exercisable by the decedent, annuities and pensions not payable to the decedent’s estate, death benefits described in Section 11-105(a)[17] and the like[.] Second Report at 3. Because Est. & Trusts § 1-102(r)’s definition of “property” was intended to be limited to “assets which have traditionally constituted what is sometimes called in Maryland the With one exception that is not relevant to the issues in this case, the language of what 16 is now Est. & Trusts § 1-102(r) tracked the recommendations by the Henderson Commission.