Lapse, Ademption, Exoneration of Liens

Question 1

When a beneficiary named in the will dies before the testator, the gift ______

Answer 1

lapses - the gift fails, falls to the residue and passes as part of residuary estate. UNLESS, it is saved by the state’s anti-lapse statute.

Question 2

UPC anti-lapse statute

Answer 2

UPC statute applies when the predeceasing beneficiary is T’s grandparent or a lineal descendant of T’s grandparent who leaves issue that survives T.

Question 3

Class Gift Rule

Answer 3

When there is a gift by will to a group of persons generically described as a class (“children,” “nephews,” etc) and some class member predeceases the testator and the lapse statute does not apply, the surviving class members take

Question 4

Gift to two or more people under UPC majority rule

Answer 4

If the residuary estate is devised to two or more persons and the gift to one of them fails for any reason, the surviving residuary devises take the entire residuary estate in proportion to their interests in the residue

Question 5

Specific Devise or Bequest

Answer 5

Identifies the specific property to be devised: “Blackacre,” “my car”, “all of my bank accounts”

Question 6

Demonstrative Legacy

Answer 6

Hybrid between general legacy with funding instructions” “I give the sum of $5,000, to be paid out of the proceeds of sale of my Acme stock, to my sister, Sarah.”

Question 7

General Legacy

Answer 7

Specified pecuniary amount: “I give the sum of $10,000 to my daughter Donna.”

Question 8

Residuary Bequest

Answer 8

“I give all the rest, residue, and remainder of my property to my wife.”

Question 9

Intestate Property

Answer 9

When there is a partial intestacy for some reason (when all the residuary beneficiaries predecease the testator, and the case is not covered by the anti-lapse statute)

Question 10

Abatement

Answer 10

The process of reducing testamentary gifts in cases where the estate assets are not sufficient to pay all claims against the estate and satisfy all bequests and devises.

Question 11

In what order are gifts sacrificed to satisfy claims against the estate?

Answer 11

1) intestate property
2) residuary bequest
3) general legacy
4) demonstrative legacy
5) specific devise or bequest

Question 12

Ademption

Answer 12

the failure of a gift because the property is no longer in the testator’s estate at the time of her death. Ademption is restricted to specific gifts only

Question 13

Ademption: when the will is executed before T declared incompetent

Answer 13

If specifically devised property is sold by conservator, or if condemnation award or insurance proceeds relating to the property are paid to the conservator, the specific devisee has a right to a general legacy equal to the net sale price, condemnation award, or insurance proceeds unless testator’s disability has been adjudicated to have ceased and testator survives the adjudication by one year.

Question 14

A specific devisee has the right to the remaining specifically devised property and:

Answer 14

1) any balance of purchase price owing from purchaser when contract is still executory at T’s death.
2) any amount of condemnation award for taking of the property, to the extent unpaid at T’s death
3) any amount of fire or casualty insurance proceeds unpaid at death.
4) any real or tangible personal property acquired as a replacement for other similar property
5) property acquired as a result of a foreclosure of a security interest on specifically devised note

Question 15

Increase in stocks: common law

Answer 15

Stock splits: devisee gets all shares

Sotck dividends: devisee gets only original shares

Question 16

Increase in stocks: UPC

Answer 16

A specific devisee takes any additional or other securities of the same entity owned by the testator because of action initiated by the entity, excluding any acquired by exercise of purchase options

Question 17

Is devisee entitled to real estate free of encumbrances/debt? (entitled to exoneration of the lien)

Answer 17

1) common law: yes, specific devisee is entitled to property free of any encumberances
2) UPC (majority): No, a specific devisee of encumbered property is not entitled to have the encumbrance paid out of the residuary estate unless the will shows such intent. Moreover, a general direction in the will to pay debts does not show such an intent.