Ademption – Testator Must Own the Specific Gift At Death Or the Gift Fails

The law relating to ademption applies when a particular item in a will is described with such specificity that it is clearly distinguished from other property owned by the deceased. If that specific property is not found among the testator’s assets after death, the gift is said to have adeemed-the gift fails and the technical term for the failure of the gift in such circumstances is ademption. The gift is said to have adeemed.

The rule applies whether the testator ever really did own the property or not .

For example testators often believe that they are the owners of property and after death, it is learned that the property was actually in another name such as a corporate entity or in joint tenancy.

The other common example that disinherited.com has witnessed is simply caused by  poor draftsmanship in a will.

The will often specifies a specific civic address to be left to a beneficiary,  when upon death it is learned that the property had been sold during the lifetime of the testator, who instead died owning another parcel of property with a different civic address.

(The proper wills drafting should have been instead something like “any residence that I own at the time of my death I hereby bequeath to ?”

In both situations the gift of the property will have adeemed.

Whether or not a gift has actually adeemed can in certain circumstances, be very difficult to determine.

Here are two examples of such litigation-there are many:

RE DEARDEN ESTATE; SHOEMAKER et al. v. PITTMAN et al.

            1987 CarswellMan 131, 26 E.T.R. 111, 46 Man. R. (2d) 222

 

By his will, made in 1970, the testator gave his dry-cleaning and laundromat business and the land where it was carried on to his nephew, MSM, and he gave the residue of his estate to his sisters and brother.

In February 1986, the testator entered into a contract to sell the business along with the land. The completion date for the contract was August 30, 1986. The testator died in June 1986. The contract, which was never in fact completed, was subject to certain conditions. In particular, the vendor was to subdivide the property by August 1, 1986; all structures on the land were not to encroach on any adjoining property; and the purchaser had a right to rescind if the financial position of the business was worse than that disclosed in financial statements provided by the testator. These conditions were never satisfied since subdivision had not occurred as of the date of the deceased’s death or as of the completion date; the building in question did encroach on land owned by the municipality and an agreement to resolve this encroachment was never made with that municipality; and the financial statements provided by the testator were in fact inaccurate, showing grossly inflated amounts for income.

The executors of the testator’s estate applied for the directions of the Court.

The Court held that there was no ademption-the he specific gift of the dry-cleaning and laundromat business, and the land on which it was carried on, was not adeemed by the contract of sale made by the deceased.

The doctrine of conversion applies only to a contract that is enforceable by and against the testator.

The contract made by the testator was not in fact enforceable by or against him since it was subject to two true conditions precedent (the conditions relating to zoning and encroachment) that were never satisfied. In addition, the contract was subject to the condition relating to financial statements which was not satisfied and which, not having been waived by the purchaser, rendered the contract unenforceable against the purchaser.

 

RE CUDECK

               1977 CarswellOnt 387, 1 E.T.R. 17, 16 O.R. (2d) 337, 78 D.L.R. (3d) 250

   Ontario Supreme Court, Court of Appeal

 

The testator’s will directed his trustee to pay M “the proceeds of a Term Deposit of $28,000.00 principal plus interest, … said Term Deposit having been made on or about November 10th, 1973.” At the time he executed his will, the testator had a term deposit of $28,000 at his bank. The testator subsequently cashed his term deposit and deposited the proceeds in his bank account. Thereafter the testator periodically purchased new term deposits, including a term deposit of $40,000, with the proceeds of the original and subsequent term deposits. During the currency of the $40,000 term deposit, the testator executed a codicil which in effect altered the terms of the original legacy so as to read:

To deliver and pay my friend, [M], … the proceeds of a Term Deposit of $40,000, … said Term Deposit having been made on or about November 10th, 1973, or at any time thereafter. …

The following year, the term deposit for $40,000 matured and its proceeds were deposited in the testator’s account. Subsequently, using the term deposit proceeds, the testator purchased a further term deposit for $36,000 and cashed it for $36,258.90. The testator supplemented the $36,258.90 with personal funds and purchased 37 one-thousand-dollar bills, which he deposited in his safety deposit box. At the testator’s death these bills were found in his safety deposit box along with a handwritten note which indicated that in the event of the testator’s death M was to get the contents of the box as a bequest.

At trial, the trial Judge found that M was entitled as a legatee, under the testator’s will, to $36,000.

On appeal, held, the trial Judge’s order was varied to include the interest received from the last term deposit, with the result that M was entitled to be paid $36,258.90 out of the $37,000 found in the safety deposit box.

No ademption.

The legacy to M would have been lost if:

(i) the proceeds of the term deposit could not have been traced, or

(ii) the testator in cashing the deposits had clearly appropriated the proceeds to himself, in which case they would have been adeemed.

Though the note found in the testator’s safety deposit box was not itself given testamentary effect, it was used to trace and identify the proceeds given by the will and codicil.

Trevor Todd

Trevor Todd is one of the province’s most esteemed estate litigation lawyers. He has spent more than 40 years helping the disinherited contest wills and transfers – and win. From his Kerrisdale office, which looks more like an eclectic art gallery than a lawyer’s office, Trevor empowers claimants and restores dignity to families across BC. He is a mentor to young entrepreneurs and an art buff who supports starving artists the world over. He has an eye for talent and a heart for giving back.

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