Abatement and Ademption Flashcards
Abatement
-Occurs when there is not enough money in an estate to fulfill all the gifts/ promises made in a will
Ademption
When a specific gift given to someone in a will no longer forms part of the estate
Courts will do anything they can
To avoid ademption
What do the courts base their decision on?
Testators intention
They operation only
In absence of a contrary intention on the face of the will (ex: specific schedules for abatement written in)
If they don’t express contrary intention
Common law applies
When estate insolvent
Testators debts must be paid. Insolvent=insufficient funds to pay all debts, creditors entitled according to their priority (general creditors last pro rata)
When solvent but insufficient to make all gifts
assets go to pay debts first and then go in order of abatement
Abatement order
First to go: residue (personal and real property) Next: general legacies Next: Demonstrative legacies Next: special gifts of personalty Last: Specific gifts of realty
Gifts eaten up on what basis
Pro rata
Pro rata
Each takes equal hit in their category
Lindsey v Waldbrook
Facts: Not enough money to satisfy all gifts. All looked the same but one had additional instruction saying to be invested for education of grandson
Ratio: Only clear language that demonstrates a clear intention will avoid pro rata schedule of abatement (not enough yours is slightly different)
Determining type of gift
-Testators themselves can say what kind of gift it is
General Legacy
- Gift payable out of the general assets of an estate
- Legacy= gift of money/ direction to use money to buy something specific (like a gift card)
- Directs them to go buy it and if they can’t give money equivalent
- General assets= residue BUT not a residual gift (specific amount)
- No attributed source- source is residue
Ademption of General legacy
They do not adeem because they are not anything specific
Re Miller
Facts: Each minister and orange lodge member one share to Ontario Brewing Co- not possible to get the stocks
Ratio: considered general legacies. Whether he owns the thing he is giving is not determinative of general/specific what matters is what you write. Wording: specific- “my” “that I currently own”. Bank account, more specific the account is described the more specific gift.
If classified as specific
- Not scared of ademption: instruction to buy it or cash value
- Scared of abatement: after residue its first to go
Demonstrative gifts
- Golden goose (best of both worlds)
- Gifts that have an attributed source to be paid primarily out of a certain asset
- Ex: cottage to be sold and proceed to kids