Changes In Property After Execution of Will Flashcards
What does ademption by extinction apply to?
Only applies to specific gifts
What does ademption by extinction not apply to?
General, demonstrative, and residuary gifts
What are the two theories of ademption?
Identity theory Intent theory
What is identity theory?
RULE – If a specifically devised item is not in the testator’s estate, the gift is presumed revoked (adeemed) Whatever has been devised to a beneficiary under will that is found no longer to be in the estate means the beneficiary gets nothing
What is intent theory
UPC 2-608 If the property is no longer in the estate at the time of testator’s death due to a voluntary act on the part of the testator, the result is the same as under the identity theory = beneficiary gets nothing If the property is no longer in the estate because of an involuntary parting – meaning: act of God, theft – then the beneficiary can receive: (1) A condemnation award (2) Insurance proceeds (3) Any unpaid balance of a purchase price (4) Replacement property, so long as the form of the property does not change (the substitution must be kind for kind)
What is a specific gift
a gift where testator had a specific item in mind when she made the gift
What is a general gift
a gift general is general if the testator intends to confer a general benefit and not give a particular asset
What is a demonstrative gift
a hybrid — it’s general gift from a specific source
What is a residuary gift
a gift that gives away all of the testator’s property that has not otherwise been given away. “All the rest, residue, and remainder of my property and estate”
Who has the burden of proof?
The challenger
Stock splits
When a stock splits, the devisees takes any addition shares that results from the stock split during the life of the testator
Dividends
Devisees will be allowed to take any dividends of stock that occur during the life of the testator
Doctrine of satisfaction
Applies only to general gifts (gifts of money) Traditional rule: i. Any monetary gift from parent to child given during testator’s life, used to be in satisfaction Modern trend: Any lifetime gift of money is not relevant to what has been left to the child at death, UNLESS there is a contemporaneous writing signed by one or both parties that says otherwise
Exoneration of Liens (common law rule)
Property that is passed by will and subject to a lien, had to have the lien cleared by the estate before the beneficiary could take it (a) The presumption is that the beneficiary is to take the devised property free and clear of any debt (b) It is presumed that the testator wanted the debt, like other debts, to be paid out of the residuary estate.
Exoneration of liens (UPC approach)
UPC reverses the common law presumption. (a) The presumption is that the testator intended the beneficiary to take the property subject to the accompanying debt (that is, to receive only the testator’s equity in the devised property). ii. The beneficiary is going to the take the property subject to any preexisting liens UNLESS – the will has specified otherwise BUT if the testator specifically says that if the property is any encumbered by any liens, the lien should be paid by estate, then the beneficiary will take the property free and clear If the estate doesn’t have enough to pay off the lien: i. He can either sell the house ii. Pay out of pocket
