Ademption – what is it and how to avoid it?

Ademption is a long standing common law doctrine. In a modern-day Will making context the doctrine of ademption is where a gift in a Will fails to pass to the nominated beneficiary as a result of the testator no longer owning that property at their date of death.

Where an ademption occurs not only does the beneficiary not receive the property that the Will maker had left them in their Will but they do not receive any payment for the failed gift.

For example, in 2003 Sarah makes a Will leaving her investment property at Manly to her niece Tanya. Tanya does not receive any other benefit under Sarah’s Will. In 2007 Sarah sells the Manly property and places the sale proceeds in an annuity fund which provides her with a better return.

Sarah doesn’t review or update her Will and later dies in 2018. The doctrine of ademption means that Tanya would not receive the Manly property or anything from Sarah’s estate, despite an intention for Sarah to benefit her niece.

Another example of ademption is where a Will maker wishes to leave all of money in a specific bank account, or shares in a public company, to a nominated beneficiary. Should the Will maker change banks it is likely the gift will adeem. Similarly, if a company merges and new shares are issued there is a likelihood that the gift of shares may also fail.

 

How to avoid Ademption

If a Will maker wants to leave specific property to a beneficiary, it is important they consider the doctrine of ademption, as any subsequent sale or gifting of such property will likely lead to the gift adeeming.

 

Best Practice

Often it is best practice for a Will maker to refer to their ‘estate’ in their Will as opposed to specific property. Where a Will maker is set on leaving specific property then extra care should be taken to ensure that if such property is disposed of that the Will is reviewed.

Leave a Reply

Your email address will not be published. Required fields are marked *