What Happened to My Gift? A Look at the Principle of Ademption.
What happens when the gift you were promised under a Will is disposed of before the testator’s death? The answer is that it depends on how the gift was disposed.
According to the principle of “ademption,” where there is a bequest of a specific item under a Will and that item no longer exists at the testator’s death or is no longer part of his estate at the time of his death, the gift is forfeited or “adeems.” Quite simply, you don’t get the gift.
However, a beneficiary who is disappointed to learn that a promised gift no longer exists must consider how the gift was disposed. More specifically, who disposed of the gift and for what reason.
Under Ontario law, if the gift was disposed of by a guardian of property or an attorney acting under a power of attorney, as the beneficiary of that gift, you are not necessarily out of luck. Section 36 of the Substitute Decisions Act (the “Act”) provides that a beneficiary of an adeemed gift is entitled to the equivalent value of the proceeds from the disposition of the gift out of the residue of the deceased’s estate. This is known as an anti-ademption clause.
The Act sets out corresponding duties on guardians and attorneys for property to determine whether the incapable person under their care has a Will and if so, to determine the provisions of the Will.
As with most rules, there are exceptions to the anti-ademption clause, including the following:
If the guardian or attorney had to dispose of the property to comply with her duties;
If the testator, while alive, gave the gift to the beneficiary (an ademption by satisfaction);
and If there is no contrary intention expressed in the Will. For instance, a clause which states that a beneficiary is not to receive any payment out of the residue in the event the gift is no longer in the testator’s estate at the time of death.
For a judicial consideration of the ademption rules, the Ontario Court of Appeal’s decision in McDougald Estate v. Gooderham [2005 CanLII 21091 (ON C.A.)] is worth reviewing. The decision offers an evaluation of the anti-ademption clause in the context of a sale of an incapable person’s property by her attorneys for property.
Thanks for reading.