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Judges affirm decision in familial dispute over insurance funds

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When Nathaniel Kappel died, it led to a dispute in the family as to who is entitled to insurance payouts on policies that Nathaniel Kappel and his brother William took out on each other in 1996. The Court of Appeals agreed with the probate court that Nathaniel Kappel’s estate is not entitled to funds from either man’s policy.

Nathaniel and William Kappel farmed together and created an agreement in 1973 that spelled out the terms of their partnership and the value of the partnership. Both men took out an insurance policy on the other valued at $50,000 in the event of one’s death. In 1996, the two took out $750,000 insurance policies on the other, but did not add those policies into the original agreement.

Nathaniel Kappel died in March 2004. The estate sought to recover the $750,000 paid on the State Life policy insuring Nathaniel Kappel’s life. Those efforts failed, so the estate filed a petition to marshal assets. William Kappel, along with his wife, Judith, and son, Mark, filed various claims against the estate. The estate countersued claiming conversion of the First Colony policy funds Nathaniel Kappel took out on William Kappel.

The probate court denied the estate recovery of the insurance proceeds, ordered William and Mark Kappel to withdraw their claims, and denied William and Judith Kappel's complaint for contribution as to a mortgage and taxes on the brothers’ farmland filed by the father and son.

In In the Matter of the Estate of Nathaniel Kappel v. William Kappel, Judith Kappel, and Mark Kappel, 32A01-1111-ES-526, the Court of Appeals affirmed that the $750,000 proceeds from the State Life policy are not property of the estate. The estate claimed pursuant to the 1973 agreement that money was to go to the estate, and William Kappel’s failure to pay it was a breach of contract and conversion.

The probate court found the 1973 agreement was abandoned because the brothers welcomed a third party into the farming operation and did not annually update the partnership valuation as contemplated by the agreement. The Court of Appeals ruled that the estate couldn’t establish the probate court’s decision was a clear error.

There was also no error in the decision finding that William and Judith Kappel did not convert the proceeds of the First Colony policy. The evidence showed that Nathaniel Kappel applied to liquidate the policy on his brother’s life and that money was deposited into the farm’s account to address the mounting losses of the partnership. There was a question as to the validity of the signature on the insurance check.

The COA also denied the estate’s request to remand the matter for a jury trial and affirmed the decision by the probate court to deny attorney fees to William, Judith and Mark Kappel. There’s no evidence to show the estate pursued the litigation in bad faith.

 

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