What is Ademption?
A last will and testament is a testamentary document that provides a set of instructions, to both your family and to the probate court, on how you’d like your estate to be handled. Most wills provide clear instructions on how the testator, (the person making a simple will), would like their property distributed after his or her death.
However, sometimes even the best thought-out wills simply do not work out. A very common issue last wills and testaments face is ademption. Ademption occurs when the testator leaves a gift in their will that they no longer own when they pass away. This property could have been sold, destroyed, or disposed of some other way during the lifetime of the testator. For example, you may have left a vehicle to your daughter in your will. However, by the time you pass away, the car has either been sold or taken to the junkyard.
In this case, the gift adeems which means that it becomes moot and irrelevant. When a gift is adeemed, the estate is not responsible for reimbursing the person for the value of the property. Thus, if the vehicle was valued at $10,000, the estate will not have to pay your daughter $10,000. This rule applies whether the property was intentionally removed (the testator sold or gifted the vehicle during their lifetime) or unintentionally removed (the vehicle died or was repossessed).
Additionally, ademption would apply if the property’s character significantly changes. For example, if you leave a piece of real estate that has a higher value because of the natural resources on the property, but later these resources are extracted or lost, the gift would be adeemed.
One exception to this rule is if the testator’s estate received insurance proceeds from the loss of the property. For example, if the vehicle that was meant to be passed down to your daughter was in an accident only a few weeks before you passed away, your daughter would be entitled to receive the insurance proceeds.
Finally, ademption does not apply to demonstrative bequests if the testator names the source of a cash bequest. This means that if your will states that you are gifting $10,000 from one of your specific checking accounts, even if you close this account before your death, your beneficiary is still entitled to this amount of money. In this case, the bequest will be treated as though the source of the bequest was not specified.
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Finally, for more on what is ademption, contact us at 202-803-5676. You can also directly schedule a consultation with one of our skilled attorneys. Additionally, for general information regarding estate planning, check out our blog.