Changes in Beneficiaries and Property After Will's Execution Flashcards
What happens if a will beneficiary dies during the testator’s lifetime and who receives the gift?
The gift “lapses,” or fails, and the person who receives the lapsed gift is controlled by:
1. The express terms of the will
2. Applicable anti-lapse statute
3. Residuary clause; then
4. Intestacy statute
What is VA’s Anti-Lapse Statute?
Absent contrary provision in will, saves testamentary gift if predeceasing beneficiary was a grandparent or lineal descendant of the testator’s grandparents
* Beneficiary’s descendants that survive the testator are substituted as takers
* Example–lift a gift for your brother and he predeceases you; your brother’s descendants will take
What happens if the anti-lapse statute does not apply?
Residuary beneficiaries who survive testator take deceased beneficiary’s share in proportion to their interest in the residue
What if the beneficiary was dead when the will was executed?
The anti-lapse statute and “surviving residuary beneficiaries rule” still applies even to void gifts
* The gift to a dead person is void, but will be saved by Anti-Lapse statute or surviving residuary beneficiaries rule
What is ademption by extinction?
When specifically bequeathed property is not in the testator’s estate at death
* The bequest is “adeemed,” or fails
* Example–“my guitar to my nephew,” but before death T sells guitar (T not entitled to guitar OR profits from sale–gift is adeemed)
What does ademption by extinction apply to?
Specific devises and bequests
* May be partially adeemed
* If bequest is of testator’s interest in the property (and not the property itself), ademption will not apply
* Option to purchase specifically devised property does not adeem the gift where not exercised
What does ademption by extinction not apply to?
General or Demonstrative Lagacies
* General–bequest of dollar amount payable out of general assets of estate without a claim on any particular source of payment
* Demonstrative–gift of general amount that identifies particular asset as primary source of payment
What are the statutory exceptions to ademption?
(1) Sale of devised property by guardian or conservator (or fire/casualty insurance proceeds for damage to property)
* Specific beneficiary entitled to a general legacy equal to the net sale price or insurance proceeds
(2) Where not involving guardian/conservator, any amount of a condmnation award or any proceeds from fire or casualty insurance on the property
* Right is only to the extent that these amounts are paid after death
(3) Corporate Reogranizations/Mergers
* For stock, entitled to securities of another corporation owned by testator as result of merger, consolidation, reorganization, or other similar action taken by entity
* Example–“500 shares of company A stock to son,” and company A merges with company B, who then issues 1000 shares of company B stock in exchange
When is an inter vivos gift treated as partial or total satisfaction of legacy?
Inter vivos gift not treated as partial or total satisfaction of legacy unless:
* (1) testator declares in a contemporaneous writing that the gift was intended to satisfy a legacy
* (2) beneficiary acknowledges in writing that the gift is in satisfaction; OR
* (3) the will expressly states that legacies are to be reduced by such inter vivos gifts
