Ademption
Encyclopedia
Ademption is a term used in the law
of wills
to determine what happens when property bequeathed under a will is no longer in the testator
's estate
at the time of the testator's death. For a devise (bequest) of a specific item of property (a specific gift), such property is considered adeemed, and the gift fails. For example, if a will bequeathed the testator's car to a specific beneficiary, but the testator owned no car at the time of his or her death, the gift would be adeemed and the aforementioned beneficiary would receive no gift at all.
General bequests or general gifts - gifts of cash amounts - are never adeemed. If the cash in the testator's estate is not sufficient to satisfy the gift, then other assets in the residuary estate
will need to be sold to raise the necessary cash.
Some property lies in a "gray" area, in which the testator's specific intent must be determined. For example, where the testator bequeathes "500 shares of stock" in a company, this may be read as a general bequest (that the estate should purchase and convey the particular stocks to the beneficiary), or it may be read as a specific bequest, particularly if the testator used a possessive ("my 500 shares"). Such a gift is deemed to be a demonstrative gift. Such demonstrative gifts are deemed to be a hybrid of both specific and general gifts. If one were to bequeath "500 shares of stock," most states would deem that to be a demonstrative gift. The resultant gift to the heir receiving "500 shares," would be the date of death value of 500 shares of that particular stock.
Ademption may be waived if the property leaves the estate after the testator has been declared incompetent. Furthermore, in some cases the beneficiary will be entitled to the proceeds from the sale of property, or to the insurance
payout for property that is lost or destroyed.
To avoid confusion as to what may or may not be adeemed, sometimes the phrase "if owned by me at my death" is placed into the articles of a will in which property is being bequeathed.
As for the sale of land under an executory contract
, traditional case law
agrees that ademption occurs upon the death of the testator and that the proceeds of sale, when the closing, occurs should not pass to the specific devisee of the property. However, the more modern view and the Uniform Probate Code
, which has been adopted by some states, disagrees. These jurisdictions find that when property subject to specific devise is placed under contract of sale before the decedent's death, the proceeds of the sale will pass to the specific devisee.
In Wisconsin
, state law (854.08) attempts to abolish the common law doctrine of ademption by extinction, by, for example, awarding beneficiaries the balance of the purchase price of the item sold (subject to some limitations).
In Virginia
, ademption occurs with respect to most forms of property, but if the property at issue is stock certificate
s, then the fact that the issuer of the stock has been bought out by another company, and that the stocks have been swapped for a new issue by that company, will not adeem the gift of stock. Similarly, if the shares of stock that existed at the time the gift was made have split (for example, where the holder of 500 shares receives a reissue of 1,000 shares each having half the value of the original), then the beneficiary of that gift will be entitled to the number of shares that exist after the split.
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
of wills
Will (law)
A will or testament is a legal declaration by which a person, the testator, names one or more persons to manage his/her estate and provides for the transfer of his/her property at death...
to determine what happens when property bequeathed under a will is no longer in the testator
Testator
A testator is a person who has written and executed a last will and testament that is in effect at the time of his/her death. It is any "person who makes a will."-Related terms:...
's estate
Estate (law)
An estate is the net worth of a person at any point in time. It is the sum of a person's assets - legal rights, interests and entitlements to property of any kind - less all liabilities at that time. The issue is of special legal significance on a question of bankruptcy and death of the person...
at the time of the testator's death. For a devise (bequest) of a specific item of property (a specific gift), such property is considered adeemed, and the gift fails. For example, if a will bequeathed the testator's car to a specific beneficiary, but the testator owned no car at the time of his or her death, the gift would be adeemed and the aforementioned beneficiary would receive no gift at all.
General bequests or general gifts - gifts of cash amounts - are never adeemed. If the cash in the testator's estate is not sufficient to satisfy the gift, then other assets in the residuary estate
Residuary estate
A residuary estate, in the law of wills, is any portion of the testator's estate that is not specifically devised to someone in the will, or any property that is part of such a specific devise that fails. It is also known as a residual estate or simply residue. The will may identify the taker of...
will need to be sold to raise the necessary cash.
Some property lies in a "gray" area, in which the testator's specific intent must be determined. For example, where the testator bequeathes "500 shares of stock" in a company, this may be read as a general bequest (that the estate should purchase and convey the particular stocks to the beneficiary), or it may be read as a specific bequest, particularly if the testator used a possessive ("my 500 shares"). Such a gift is deemed to be a demonstrative gift. Such demonstrative gifts are deemed to be a hybrid of both specific and general gifts. If one were to bequeath "500 shares of stock," most states would deem that to be a demonstrative gift. The resultant gift to the heir receiving "500 shares," would be the date of death value of 500 shares of that particular stock.
Ademption may be waived if the property leaves the estate after the testator has been declared incompetent. Furthermore, in some cases the beneficiary will be entitled to the proceeds from the sale of property, or to the insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
payout for property that is lost or destroyed.
To avoid confusion as to what may or may not be adeemed, sometimes the phrase "if owned by me at my death" is placed into the articles of a will in which property is being bequeathed.
As for the sale of land under an executory contract
Executory contract
An executory contract is a contract which has not yet been performed or executed. Although material, an obligation to pay money does not usually make a contract executory. An obligation is material if a breach of contract would result from the failure to satisfy the obligation...
, traditional case law
Case law
In law, case law is the set of reported judicial decisions of selected appellate courts and other courts of first instance which make new interpretations of the law and, therefore, can be cited as precedents in a process known as stare decisis...
agrees that ademption occurs upon the death of the testator and that the proceeds of sale, when the closing, occurs should not pass to the specific devisee of the property. However, the more modern view and the Uniform Probate Code
Uniform Probate Code
The Uniform Probate Code is a uniform act drafted by National Conference of Commissioners on Uniform State Laws governing inheritance and the decedents' estates in the United States...
, which has been adopted by some states, disagrees. These jurisdictions find that when property subject to specific devise is placed under contract of sale before the decedent's death, the proceeds of the sale will pass to the specific devisee.
Statutory variations
Many jurisdictions have ameliorated the effects of the common law doctrine by statute.In Wisconsin
Wisconsin
Wisconsin is a U.S. state located in the north-central United States and is part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin's capital is...
, state law (854.08) attempts to abolish the common law doctrine of ademption by extinction, by, for example, awarding beneficiaries the balance of the purchase price of the item sold (subject to some limitations).
In Virginia
Virginia
The Commonwealth of Virginia , is a U.S. state on the Atlantic Coast of the Southern United States. Virginia is nicknamed the "Old Dominion" and sometimes the "Mother of Presidents" after the eight U.S. presidents born there...
, ademption occurs with respect to most forms of property, but if the property at issue is stock certificate
Stock certificate
In corporate law, a stock certificate is a legal document that certifies ownership of a specific number of stock shares in a corporation...
s, then the fact that the issuer of the stock has been bought out by another company, and that the stocks have been swapped for a new issue by that company, will not adeem the gift of stock. Similarly, if the shares of stock that existed at the time the gift was made have split (for example, where the holder of 500 shares receives a reissue of 1,000 shares each having half the value of the original), then the beneficiary of that gift will be entitled to the number of shares that exist after the split.