What is ademption?
Ademption occurs when property gifted in a will is not in the estate’s possession at the time of the testator’s death. This occurs when the property has been sold, destroyed or given away before the testator’s death.
The general rule of ademption states that when a property mentioned in a will is no longer in the estate’s possession, the property or its cash equivalent is not passed to the beneficiary. When this occurs, the property is considered adeemed.
Ademption laws vary from state to state. Sometimes heirs can claim the property if they can prove the testator was not competent at the time he sold or gave away the property.
Estate planning experts recommend that people plan for ademption issues when establishing their estates. Including language that clarifies your wishes if a piece of property is not in your estate’s possession at the time of your death can help ensure your wishes are honored.
Ademption should not be confused with ademption by satisfaction. Ademption by satisfaction occurs when the testator changes the timing of a gift so that the beneficiary can enjoy the gift before the testator’s death. For example, a grandparent may decide to give a grandchild the money that is already bequeathed in a will while the grandparent is still alive to help pay for the grandchild’s college.
Mary has named her daughter as the beneficiary of her car in her will. Six months before she dies, Mary is in a car accident and the damages to the car are so significant that the insurance company totals the car and sells it to a junkyard. Mary doesn’t update her will to reflect that the car is no longer in her possession. According to the rule of ademption, the car will not pass to Mary’s daughter, nor will she receive any compensation for the car.