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 What is Ademption?

Ademption is a concept in the law that deals with wills. It comes into play when a testator, i.e., an individual who creates a will, bequeaths a particular piece of property to a particular person named in their will. However, at the time of the testator’s death, it is found that the testator no longer owns that property. In this situation, the property is said to have been “adeemed.”

The person to whom the property was bequeathed cannot inherit it. Furthermore, the person is not entitled to receive any other property as compensation.

Suppose property bequeathed in an estate has been sold, destroyed, given away, or is no longer in existence at the time of the testator’s death. In that case, it has been “adeemed by extinction”, in legal terminology.

Another type of ademption is also possible, ademption by satisfaction. Ademption by satisfaction takes place when the testator has given property to a beneficiary instead of making a gift of the property in their will. In this case, the person to whom the bequest was made in a will has the property, so all is well.

To avoid problems with ademption, a person can add to a bequest the phrase “if owned by me at my death.” Ademption makes it clear that the bequest is only made if the property is part of the testator’s estate at the time of their death.

An example of ademption is a provision in a will that states, “ I bequeath my car to my son.” If the testator does not own any car at the time of their death, the beneficiary, i.e., the son, does not inherit a car. They also would not be entitled to receive other property as a substitute for the car.

What if the Will Provides a General Gift?

Of course, ademption only applies to bequests of specific items of property. General bequests of sums of money are not subject to ademption. However, an estate could end up with insufficient funds to pay a bequest of a sum of money also.

For instance, suppose a will bequeaths a certain amount of money to an heir, but the estate does not have enough cash to distribute the amount bequeathed. The estate must then sell off some assets to raise as much money bequeathed to the heir as possible.

Once this is done, the heir receives whatever amount of money the estate can raise by selling off the residual assets up to the amount bequeathed. If the sale of assets cannot raise the full amount of the bequest, then the heir would receive the amount available that is less than the full amount bequeathed.

What if an Estate Does Not Have Enough Money to Pay Both Debts and Bequests?

If an estate does not have enough money to cover the amount of its debts and the bequests made in the will, then the estate must deduct the amounts needed to pay the debts of the estate from the bequests provided by the will. How this is done depends on the law of the state in which a will is probated, generally in which the testator lived.

Either state law or the probate court sets a deadline for creditors to make formal claims to pay debts to the estate. There would also be a deadline for disputing any decision by an executor not to pay a debt.

The court in which a will is probated oversees the process of paying the debts of the estate if the estate does not have enough money to pay its beneficiaries. The court decides which beneficiaries receive what amounts of money or items of property from the estate, guided by the will’s provisions to the extent possible.

If the testator has not left assets sufficient to pay all the bequests after the debts are paid, then the court orders abatements. A reduction in a bequest is referred to as an “abatement.”

Again, the order in which bequests are reduced or consumed in part or in whole to pay off creditors may vary from state to state. In California, for instance, bequests to non-relatives are used to pay off debt before bequests are made to relatives.

What if It Is Not Clear That the Property Should Be Adeemed?

If a situation arises in which the will provides a bequest for a specific piece of property, the answer to how this is handled may depend on the type of property and the circumstances.

For example, if a will grants certain shares of stock to an heir and the estate no longer owns that stock at the time of the testator’s death, then the exact wording of the gift might become the determining factor for the court.

In one scenario, if the will simply bequeaths “500 shares of stock in Microsoft,” and the estate does not own that stock, the estate may have two options. It may either buy the specified shares and distribute them to the beneficiary, or it can give the heir the cash value of the stock at the time of the testator’s death.

On the other hand, if the will leaves “my 500 shares of stock in Microsoft,” the situation becomes more complicated. In this case, it could be determined that the testator left a specific piece of property. If so, the heir would be entitled to nothing if the estate does not own the stock at the time of the testator’s death.

What If the Testator Did Not Intend to Lose the Property?

In some states, ademption may not apply if the following is shown:

  • There is an accident or other incident beyond the testator’s control that causes the estate to lose the property; and
  • There is a high likelihood that the testator did not intend for the property to be adeemed.

Notice that there are two parts to the question. The first part of this ademption exception may be triggered when the property is either 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.” To meet this first requirement, the testator would have had to have only one car before their death, and that car must have been destroyed along with the testator, e.g., if the testator was involved in an accident.

The second part of the ademption exception is where it becomes a bit more complicated. The second element is generally fulfilled if the testator was unaware that the property was lost or stolen and did not have time to change the will.

For instance, imagine that the testator’s car from the first example was stolen. If the thief killed the testator while stealing the car, the testator would not have had time to amend their will. Thus, the son would be entitled to a different car or perhaps an amount representing the car’s value that was bequeathed to the son.

However, if the car was stolen and the testator did not amend their will or buy a new car before their death years later, then the second element for the exception is not met. Therefore, the son will not be entitled to a replacement car or its equivalent value because the testator failed to fulfill the requirements of the ademption exception.

What Happens if I Inherit Real Property with a Mortgage?

If a beneficiary inherits real property that still has a mortgage attached to it, they also inherit the mortgage. The heir is then responsible for paying off the mortgage. If an individual wants to avoid paying the mortgage, they may be able to disclaim that bequest of the testator’s will.

Before disclaiming the bequest, a person might want to ensure that the property’s value is not larger than that of the mortgage. If it is, then the person would want to accept the bequest. They could then sell the house, pay off the mortgage and keep any remaining proceeds from the sale, or the person might be able to rent the property and use the rent paid to pay the mortgage.

A person would want to analyze all the facts of the situation before deciding to take a pass on a bequest of real property.

Do I Need the Help of a Lawyer With My Ademption Issue?

The law of ademption and wills generally can be challenging to apply. If something that an estate no longer owns has been bequeathed to you, you should consult an experienced will lawyer to protect your rights. Or if you have learned that any other type of bequest made to you will not be distributed by the executor of an estate, you should consult an estate lawyer for guidance.

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