5. Changes to Property After Execution of the Will

Question 1

What are the four types of testamentary gifts?

Answer 1

1. Specific testamentary gifts,
2. Demonstrative gifts,
3. General gifts,
4. Residuary testamentary gifts.

Question 2

What is a specific testamentary gift?

Answer 2

Gifts of a specific item of real or personal property owned by the testator.

Question 3

What is the keyword of a specific devise?

Answer 3

The key word is ‘my.’

Question 4

What is a demonstrative testamentary gift?

Answer 4

gift of a general nature coming from a particular source.

Question 5

What happens if the fund is insufficient to satisfy a demonstrative gift?

Answer 5

The beneficiary is entitled to additional property to make up the amount of the gift.

Question 6

What is the key word of a general devise?

Answer 6

The key word is ‘from.’

Question 7

What is a general testamentary gift?

Answer 7

payable out of the general assets of the estate, rather than requiring distribution of or payment from particular assets.

Question 8

What is a residuary testamentary gift?

Answer 8

portion of a decedent’s estate that remains after all specific, demonstrative, and general gifts have been distributed, as well as after settling any debts, taxes, and administrative expenses.

Question 9

What occurs to lapsed or void testamentary gifts under the will?

Answer 9

They become part of the residuary estate.

Question 10

If the will lacks a residuary clause, or if the designated residuary beneficiaries are unable to inherit (due to death or other reasons), the undistributed assets may pass:

Answer 10

according to Georgia’s intestacy laws.

Question 11

Ademption by Extinction

Answer 11

When a specific gift of property is no longer in the testator’s estate at the time of their death, the gift is adeemed by extinction and the beneficiary does not receive it.

Question 12

Does Ademption by Extinction apply to demonstrative or general dispositions?

Answer 12

No, it applies only to property specifically described in the will.

Question 13

How does Ademption occur?

Answer 13

1. By an intentional act on the part of the testator (e.g., a sale or gift);
   or
2. by an involuntary circumstance (e.g., fire or theft).

Question 14

What happens to a testamentary gift if the testator exchanges property?

Answer 14

In Georgia, if a testator exchanges or reinvests a specific testamentary gift for similar property, the gift does not fail; the new property substitutes the original.

Question 15

What happens to a testamentary gift when a testator moves the property from one location to another?

Answer 15

If the testator moved the property from one location to another, and the will still refers to the former location only, the new location will substitute and the gift does not fail.

Question 16

Does Georgia have exceptions where the testator might not have sufficient time to rewrite the will to account for the disappearance of specifically gifted property?

Answer 16

Georgia has created exceptions for certain situations in which the testator might not have sufficient time to rewrite the will to account for the disappearance of specifically gifted property.

Question 17

What is the Insured Property: 6-Month Rule?

Answer 17

If property is lost, stolen, or destroyed within six months before the testator’s death and insured, the beneficiary receives any unpaid insurance proceeds or an amount equal to the paid proceeds.

Question 18

What is the Damaged Property Rule?

Answer 18

If property is damaged within six months before the testator’s death, the beneficiary receives the insurance proceeds minus any repair costs already paid by the testator or personal representative.

Question 19

What is the Condemned Property Rule?

Answer 19

If property given in a specific testamentary gift is condemned within six months before the testator’s death, the beneficiary is entitled to any unpaid condemnation award or an amount equal to the paid award.

Question 20

What is the After-Acquired Property Rule?

Answer 20

Any property acquired by the testator after making a will passes under that will if the provisions are broad enough to include it.

Question 21

Specific Gifts of Securities

Effect of Changes

Answer 21

A specific gift of securities (e.g., “my 100 shares of XYZ stock”) refers only to those particular shares owned by the testator at the time the will is executed.

Ademption: If the testator no longer owns the securities at death (e.g., they were sold or transferred), the gift is adeemed, and the beneficiary receives nothing.

Exception: If the testator’s estate includes replacement securities (e.g., from mergers or stock splits), the beneficiary may receive the equivalent shares

Question 22

Stock Splits or Stock Dividends

Answer 22

A beneficiary of a specific gift of securities is entitled to receive additional shares acquired due to stock splits or dividends.

Question 23

Cash Dividends(Before Death)

Answer 23

Cash dividends declared and payable before the testator’s death become part of the general estate, not the specific gift.

Question 24

Cash Dividends(After Death)

Answer 24

Cash dividends declared and payable after the testator’s death belong to the beneficiary of the specific gift.

Question 25

Mergers and Acquisitions

Answer 25

Replacement securities pass to the beneficiary.

Question 26

Redemption of Securities:

If the securities are redeemed (bought back by the corporation) during the testator’s lifetime:

Answer 26

The gift is adeemed, and the beneficiary does not receive anything unless the will specifies otherwise.

Question 27

General Gifts of Securities(Definition)

Answer 27

A general gift of securities (e.g., “I give 100 shares of XYZ stock to John”) is not tied to specific securities owned by the testator.

Question 28

If the testator does not own the specified general securities at death:

Answer 28

The executor must purchase the securities using estate funds to fulfill the gift.

Question 29

Rights to Proceeds

If specific securities are sold after the execution of the will:

Answer 29

Unless the will states otherwise, the beneficiary is not entitled to the proceeds from the sale. The proceeds become part of the residuary estate.

Question 30

Rule Against Apportionment of Loss

If the value of securities decreases after the will is executed, the beneficiary MUST:

Answer 30

accept the securities in their depreciated state.

Question 31

What is ademption by satisfaction?

Answer 31

Property given during the testator’s lifetime to satisfy a specific testamentary gift.

Question 32

What evidence is needed for a lifetime gift to be in satisfaction of a specific testamentary gift?

Answer 32

The testator’s intent to satisfy the gift must be clear, typically evidenced by a written document.

Question 33

what is the proof for ademption by satisfaction?

Answer 33

Georgia requires the same proof as for advancement, i.e., the intent to treat a lifetime transfer as a satisfaction is shown only if:
1. the will provides for the deduction of the lifetime transfer or its value; or
2. the satisfaction is declared in a writing signed by the transferor within 30 days of making the transfer or
3. acknowledged in a writing signed by the recipient at any time

Question 34

What is abatement?

Answer 34

If the estate’s assets are insufficient to satisfy all gifts, some gifts may be reduced or eliminated according to the rules of abatement.

Question 35

How does a testator indicate the order in which assets of the estate are to be paid toward debts charged to the estate?

Answer 35

A testator may indicate in the will the order in which the assets of the estate are to be paid toward debts charged to the estate.

Question 36

unless the will specifies otherwise, the order in which assets abate is as follows:

Answer 36

RGDS

1. Residuary devises;
2. General devises;
3. Demonstrative devises;
4. Specific devises.

Unless otherwise directed, the debts of the testator are paid out of the residuary.

Question 37

What is exoneration?

Answer 37

In Georgia, property passing under a will does not automatically pass free of liens or mortgages unless the will expressly directs otherwise.

Question 38

Does Georgia recognize the doctrine of exoneration of liens?

Answer 38

Beneficiaries take property subject to any mortgages or liens existing at the testator’s death, unless the will provides that debts should be paid from the general estate.

Question 39

What are accretions?

Answer 39

Increases in or additions to specific property after the testator’s death.

Question 40

What happens to the income, profit, or increase of specific testamentary gifts?

Answer 40

They go with the gift.