By Fredrick P. Niemann, Esq. a New Jersey Will Attorney
Here’s a neat legal term that is seldom used. It is used in the law of wills and is called “ademption.” If you or I (testator) make a will and leave specific property to someone and then later we sell or otherwise disposes of the property, the law says that the gift is “adeemed.” In other words, the person to whom it was given under the will doesn’t get anything. Why? Because it’s gone before you died and a will only covers property you own when you die.
Ademption applies to specific gifts such as “I give my nephew my 10,000 shares of IBM stock.” If the testator sells the shares before he dies or if he gives them away, then the person to whom he gave them in the will gets nothing. That’s assuming that the only thing the person was due under the will was the 10,000 shares of stock.
Some of the legal issues surrounding the question of ademption are:
1. What if the testator sells the property but the proceeds from the sale can be easily traced? Does the person to whom the property was given in the will get the proceeds?
2. What if the property changes form such as a gift of “my 10,000 shares of IBM” where IBM is taken over by Apple before the testator’s death and the shares are now 5,000 shares of Apple?
3. What if the testator becomes incapacitated and his guardian or someone who has a power of attorney disposes of the property?
4. What if the testator has 20,000 shares of IBM and before he dies he gives you 10,000 shares? Do you get anything under the will? What if he gives you 10,000 shares and sends a letter saying that these shares are your part of his estate?
In a recent case, the wife left her husband “our homestead.” At the time of her death, a divorce was pending, although not final. The parties were living separately. They had agreed in a mediated settlement that wife would receive the house in the divorce. The court ruled that the husband did not get “our homestead” because the gift had adeemed. It no longer existed since the parties were living separately.
In a recent case, the testator gave his house to a beneficiary. Before he died, the testator entered into a contract to sell the house. He died before the closing. The court held that the gift to the beneficiary adeemed since the testator no longer owned the home. The court ruled that once he signed the contract to sell it, he just owned the rights under the contract, not the home. Therefore, the gift of the home to the beneficiary adeemed.
Contact me personally today to discuss your New Jersey estate planning matter. I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns. You can reach me toll free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com/.