Tag: Ademption

16 Jul

Bequesting What You Don’t Have: Ademption

Paul Emile Trudelle Estate & Trust, Estate Planning, Wills Tags: , , 0 Comments

“Ademption occurs when the property which is the subject of a specific gift, although in existence at the date of the will, is not in the testator’s estate at his death. It may have been sold or given away by the testator, or it may have been lost, stolen or destroyed. In the absence of a statutory provision to the contrary, if a specific gift has adeemed, the beneficiary gets nothing.”

This explanation of ademption comes from Oosterhoff on Wills, 8th ed. (Toronto: Carswell, 2016) at 538, as quoted in Best v. Hendry, 2021 NLCA 43 (CanLII).

In Best, the issue of ademption was front and center. The testator left a will that provided that her house was to go to her niece Hendry, and the residue of her estate was to go to her niece Best. Many years after making the will, the testator developed dementia, and was moved from her home to a nursing home. Best applied to be her guardian, and proceeded to sell the home.

Upon the testator’s death, Best claimed that the gift of the house adeemed, and the proceeds of sale fell into the residue. The Newfoundland Court of Appeal agreed.

In Ontario, recourse to ss. 35.1 and 36 of the Substitute Decisions Act may have applied. Section 35.1(1) provides that a guardian shall not dispose of property that the guardian knows is subject to a specific testamentary gift in the incapable person’s will. Section 35.1(3) allows for the disposition of the property if it is necessary to comply with the guardian’s duties. However, s. 36 provides that the doctrine of ademption does not apply to such dispositions by the guardian, and that the beneficiary is entitled to receive from the residue of the estate the proceeds of disposition, without interest.

According to the decision in Best, only Ontario and B.C. have such anti-ademption legislation.

(Best also dealt with issues relating to a release initially signed by Best, the liability of the estate trustee to Best, and the right of the estate trustee to recover funds improperly paid to a beneficiary (Hendry). I will not address those here.)

This brings me to my favourite ademption joke. A testator went to a lawyer to prepare his will. He told the lawyer that he wanted to make a bequest of a house to his loving wife, a cottage to his two loving sons, and a Frisbee collection to his loving dog. When the lawyer reminded the testator that he did not have a house, a cottage or a Frisbee collection, the testator responded: “Well, that’s their problem. I’ll be dead by then.”

Have a great weekend.

Paul Trudelle

20 Apr

When There Just Isn’t Enough to Go Around: Abatement and Ademption

Hull & Hull LLP Estate & Trust, Estate Planning Tags: , , , , , , , , , , , 0 Comments

In a perfect situation, a deceased person’s estate would correspond exactly with the gifts as set out in his or her last will and testament. However, it is sometimes the case that the assets of an estate are insufficient to pay all of a testator’s debts, as well as all gifts set out in his or her will, or where the object of a specific bequest no longer exists at the time of the testator’s death.

In the former situation, the principle of abatement would apply to the distribution of the estate to beneficiaries, meaning that the gifts set out in the testator’s will are reduced rateably and in order depending on the type of bequest. If the estate has insufficient assets to pay the testator’s debts, it would be insolvent and the legacies described in the testator’s will would be unable to be paid. If there are assets leftover after payment of debts, but they are not sufficient to fully satisfy all gifts, then some or all of the gifts will abate.

If the testator’s will does not specifically provide for the order in which gifts are to abate, the order of abatement of bequests is as follows:

  1. Residuary personalty.
  2. Residuary real property.
  3. General legacies, including pecuniary bequests from the residue.
  4. Demonstrative legacies, meaning bequests from the proceeds of a specific asset or fund not forming part of the residue.
  5. Specific bequests of personalty.
  6. Specific devises of real property.

The abatement of gifts in each category will occur in equal proportions so that no single beneficiary will be made to bear the full burden of the abatement.

Ademption occurs when a specific legacy in a testator’s will cannot be satisfied due to the lack of existence of the property that was the subject of the bequest. When a specific gift adeems, it fails, and the beneficiary will not receive the gift.

In Ontario, there are a number of statutory provisions that affect the doctrine of ademption, including ss. 20 and 22 of the Succession Law Reform Act, R.S.O. 1990, c. S.26 that permits a will to operate on substituted property, and s. 36 of the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (the “SDA”) which provides that ademption does not apply to property disposed of by a guardian under the SDA.

Thanks for reading,

Rebecca Rauws

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