Blog Rule of Ademption

By Cowles Liipfert & Don Wells

“Ademption” is a term for the extinguishment of a testamentary gift whenever the subject matter of a specific devise or bequest in a testator’s Will is not owned by the testator at death.

Ademption is different from, and sometimes confused with “abatement” (i.e. – when there are not enough assets to fund, or fully fund all gifts).  For example, suppose that a Will leaves three bequests of $100,000 each, but the estate has only $75,000 available to fund those bequests:  In that case the three beneficiaries would receive $25,000 each, under the Rule of Abatement.

An example of ademption is: let’s suppose a testator’s will left a portrait of great-grandfather to a named individual and later the testator gave that portrait to another family member.  The bequest of that portrait would normally be null and void, since the portrait did not belong to the testator on the date of death.

Sounds simple enough on its face, but everything isn’t always black and white. Sometimes it is difficult to apply a general rule to certain applicable fact situations.

For example, if there was a bequest of 1000 shares of Standard Oil of New Jersey stock in a 1965 Will, which corporation later changed in name to Exxon Corporation, which later merged with Mobile Oil Corporation to become Exxon-Mobil Corporation.  Would the original gift adeem (or become null and void under those circumstances) or would it remain effective, notwithstanding the name changes (and in the case of the Exxon-Mobile merger, a change of the underlying bequest), and what if the shares had split to become 2000 shares?

In one North Carolina case, a person wrote a will leaving a rental property to a charitable beneficiary.  The testator later became incapacitated and continued to live for more than 10 years.   A trustee was authorized to transact business for the disabled testator, to provide for the testator’s care and support.  Eventually the fiduciary disposed of the store property to pay for the care of the disabled testator, but the testator died before the proceeds of sale had been completely spent.  Some of the net proceeds from the sale of the store were traced to the remaining bank accounts at the date of death.  The court ruled that the traceable funds were not adeemed and the court awarded those funds to the charitable beneficiary, even though the store property had been sold.  Another North Carolina case later expanded a similar award beyond traceable proceeds.

In the case of the store property discussed above, it made a difference that the testator did not remain competent after the original will had been signed until her death, and thus was unable to change her Will after the property was sold.  Consequently, the rule of ademption isn’t an inflexible law; instead, it is a rule which a court applies to the facts, to reach a just conclusion.

A will can be written to anticipate possible changes after the will was written and before the testator’s death, such as by devising “the home in which I am living at my death” instead of ”the house at 123 Shady Lane” when the testator died, if the testator wishes that language to apply.

Because of the complexity of the rule of ademption, it is strongly suggested that a testator review his or her will periodically, to make sure that it is still expresses the testator’s wishes if the testator becomes incapacitated, that his or her guardian, custodian or trustee avoids inadvertent and unintentional ademptions.  The review should be done in consultation with a professional.

Our law firm can be contacted at 336-725-2900 for advice in this regard.