3. Changes to Property Between Will Execution and Testator's Death

Question 1

Devise

Answer 1

A gift of real property

Question 2

Bequest

Answer 2

A gift of personal property

Question 3

Specific Bequest

Answer 3

A bequest that is distinguishable from rest of testator’s estate at time of will execution

Question 4

Specific Bequest of a General Nature

Answer 4

A bequest that is not distinguishable from the rest of testator’s estate until testator dies.

Question 5

Legacy

Answer 5

A gift of personal property not sufficiently described to be specific

Question 6

Demonstrative Legacy

Answer 6

A gift of a sum of money payable out of a designated fund

Question 7

What happens if a designated fund is insufficient?

Answer 7

If designated fund is insufficient, balance will be paid from other assets of the estate.

Question 8

Residuary Gift

Answer 8

Remainder of the estate

Question 9

What happens if a specifically gifted item is not in the estate when the testator dies, e.g., the item was sold, given away, destroyed in a fire, stolen, etc.?

Answer 9

General rule: Gift adeems according to the identity rule. Beneficiary does not take a substitute gift nor the value of the gift. No tracing into proceeds even if they are identifiable.

Question 10

What exceptions are there to the rule of ademption?

Answer 10

1. Insurance Proceeds
2. Executory Contract Proceeds
3. Proceeds from a Sale by a Guardian or Conservator

Question 11

What is required for a beneficiary to receive the insurance proceeds for lost, damaged, or destroyed specific gifts, or proceeds for an executory contract?

Answer 11

They must be paid after the testator’s death.

Question 12

What is required for a beneficiary to receive proceeds from a sale by a guardian or conservator of specifically given property?

Answer 12

The proceeds must be traceable.

Question 13

What is ademption by satisfaction?

Answer 13

A testamentary gift under the will is given inter vivos to the beneficiary by the testator between the time of will execution and the time of death; a prepayment.

Question 14

What proof is required for an ademption by satisfaction?

Answer 14

1. Evidence of the advancement must be in writing (not oral) which is
2. Made at the time of the gift, and
3. Signed by the donor (testator) or donee (beneficiary).

Question 15

What effect does a change in value of a specific gift have on the gift?

Answer 15

Appreciation and depreciation of specifically gifted property between will execution and death is normally irrelevant.

Question 16

What effect does the change in value in a gift of stock in a publicly traded corporation have?

Answer 16

Gifts of shares of stock in publicly-traded corporations are normally general gifts and do not adeem.

However, if the testator indicates that the testator actually owns the stock, then the gift is specific and subject to ademption.

Question 17

Testatrix’s will provides, “I leave my 100 shares of IBM stock to Walter Bishop and 100 shares of Microsoft stock to Peter Bishop .” Testatrix owns no stock at the time of her death. What do Walter and Peter receive?

Answer 17

Walter receives nothing because the gift was specific (“my 100 shares).

Peter receives the value of 100 shares of Microsoft stock because the gift was general.

Question 18

What effect does the change in value in a gift of stock in a closely-held corporation have?

Answer 18

Gifts of stock in closely-held companies are always treated as specific and thus subject to ademption.

Question 19

Testatrix’s will provides, “I leave 100 shares of Bell Industries stock to Walter Bishop.” Before Testatrix dies, Bell Industries declares a two for one stock split so Testatrix dies owning 200 shares. How many shares will Walter receive?

Answer 19

Walter will receive 200 shares. The result would be the same even if Testatrix did not own any Bell stock.

Question 20

What effect does a merger or acquisition have on a beneficiary’s gift of stock?

Answer 20

The beneficiary takes the resulting shares because the change is one in form, not substance.

Question 21

How are the debts on specifically gifted property treated?

Answer 21

Debts on specifically gifted property are not exoneration (paid off by other estate property). Accordingly, the beneficiary receives only the testator’s equity in the specifically given property.

Question 22

What gifts fail when the estate property is inadequate to satisfy all of the testamentary gifts?

Answer 22

Order of Abatement:

1. Intestate property,
2. Residuary property,
3. General gifts,
4. Demonstrative gifts,
5. Specific gifts, and lastly
6. Items that qualify for the estate tax marital deduction.

Question 23

May a beneficiary disclaim a gift?

Answer 23

Just as heirs may disclaim, so too can beneficiaries of a will.

Property then passes as if the beneficiary predeceased the testator under the terms of the will.