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What Is Ademption?
Ademption is a concept in the law of wills. When a testator (the person who wrote the will) bequeaths a piece of property to a person, and no longer owns that property at the time of his or her death, the property is said to have been "adeemed." When this applies to a specific piece of property, the person who was to receive the specific piece of property will not receive that property.
For example, suppose the will says "my car is hereby bequeathed to my son" and the testator has no car at the time of death, the beneficiary will receive no car, and will not be entitled to anything else as a substitute. What If the Will Gives a General Gift?
Ademption only applies to specific property gifts. General gifts, typically a certain sum of money, are not subject to ademption. If a certain sum of money is left to a person, and the estate does not have enough cash on hand to meet the obligation of the will, any residual assets in the estate will be sold off to raise as much of the money as possible, which will then be given to the beneficiary.
What If an Estate Does Not Have Enough Money To Cover Debts as Well as Gifts?
If an estate cannot pay both debts and gifts, the estate is required to deduct from the gifts given by the will to pay off any debts owed by the estate. Estates typically deduct from gifts in the following order:
- Residue gifts are deducted first. These gifts give the remainder of the estate to the beneficiary. For instance: "and the rest of my estate to my son, Joe."
- General gifts are deducted next if residue gifts are unable to cover all the debt. For instance: "I leave $5,000 to my daughter, Mary."
- Specific gifts are the last gifts to be deducted. These gifts are only deducted if there is nothing left. For example: "I leave my diamond ring to my husband."
Note that the order of deduction to pay off creditors may vary from state to state. In California, for example, gifts to non-relatives are deducted first.
What about General Gifts Which Come From Specific Property?
There are some grey areas. For example, if shares of stock are in the will, and are not owned by the estate at the time of death, the wording of the gift is important. If the will simply bequeaths "500 shares of stock in Microsoft," and that stock is not owned by the estate, the estate could probably buy the stock, and give it to the beneficiary, or give the cash value of the stock at the time of death.
If the will leaves "my 500 shares of stock in Microsoft", it is more complicated. In this case, it might be read as leaving a specific piece of property, in which case, the beneficiary would be entitled to nothing if the stock is not owned by the state at the time of death.
What If the Testator Did Not Intend To Lose the Property?
In some states, ademption is not applied if there was an accident or action beyond the testator’s control which caused the testator to lose the property and there is a high likelihood that the testator did not intend ademption.
The first part of the ademption exception is triggered if the property was destroyed upon the testator’s death or if the property was stolen. For example, suppose the will says "my car is hereby bequeathed to my son." The testator only had one car prior to death and the car is destroyed along with the testator when the testator is involved in an accident.
The second part of the ademption exception is a little more trickery. Typically, the second part is fulfilled if the testator was unaware that the property was lost or if the testator did not have time to change the will. Suppose that the car the testator planned to give his son was stolen. If the thief killed the father while taking the car, then the father could not have had time to amend the will. Therefore, the son would be entitled to a new car.
On the other hand, if the car was stolen and the father did not change the will or buy a new car before his death years later, then the second requirement is not fulfilled and the son is not entitled to a replacement.
What Happens If I Inherit Real Property With Mortgage?
If you inherit real property with mortgage from a will, then you inherit the mortgage as well. If you accept the gift and the gift has unpaid mortgage, you must pay the remainder of the mortgage. If you wish to avoid the responsibility of a mortgage, you can disclaiim that portion of the will.
Do I Need a Lawyer If I Cannot Find the Property I Inherited?
The law of ademption relies on a number of assumptions. It assumes that the testator did not intend to give the gift is the property is lost. It assumes that the testator preferred certain beneficiaries over others. The law of ademption can also vary significantly from state to state. If you are beneficiary seeking to recover your gift or if you are testator seeking to protect your beneficiaries, an estate planning attorney can help.
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Last Modified: 10-17-2013 11:30 AM PDT
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