lapse, ademption, exoneration of liens

Question 1

lapsed gifts

Answer 1

1. When beneficiary named in the will dies before T, the gift lapses, falls to the residue, and passes as part of the residuary estate
2. UNLESS it is saved by the state’s anti-lapse statute.
3. The UPC statute applies when the predeceasing beneficiary is T’s grandparent or a descendant thereof who leaves issue who survive T.

Question 2

issue

Answer 2

descendants

Question 3

class gift

Answer 3

When there is a gift by will to a group of persons generically described as a class and some class member predeceases T and the lapse statute does NOT apply, the surviving class members take.

Question 4

residuary gift (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 the entire residuary estate in proportion to their interests in the residue.

Question 5

abatement

Answer 5

Abatement is 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 6

abatement

order of abatement

Answer 6

If not set out by T:
1) intestate property
2) residuary estate
3) general legacies (gift of specified pecuniary amount)
4) specific devises or bequest (specific asset)
demonstrative legacy (gift of pecuniary amount AND where the $ to come from) treated as specific legacy but not subject to ademption.

Question 7

ademption

Answer 7

Ademption refers to the failure of a gift because the property is no longer in T’s estate at time of death.
Applies ONLY to specific devises and bequests

Question 8

ademption exception

will executed before T declared incompetent

Answer 8

1. If specifically devised property is sold by conservator OR
2. If the condemnation award or insurance proceeds relating to the property are paid to the conservator, THEN
   the specific devisee has a right to the general legacy equal to the net sale price, condemnation award, or insurance proceeds UNLESS
   T’s disability has been adjudicated to have ceased and T survives the adjudication by one year.

Question 9

ademption

right of specific devisee under will executed before T declared incompetent

Answer 9

A specific devisee has the right to the remaining specifically devised property AND 1 of 5 statutory rights:

1. Any balance of purchase price owing from purchaser when K 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 10

accretion

Answer 10

increase to property after execution of will

Question 11

stock splits and stock dividends

Answer 11

common law - stock splits - include additional shares
common law - stock dividends - ONLY original shares
UPC in both cases - include additional shares
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 12

stocks through merger

Answer 12

common law - adeemed
UPC - not adeemed
A specific devisee is entitled to securities of another entity owned by T as a result of merger, consolidation, reorganization, or other similar action initiated by the entity

Question 13

land subject to encumbrance

Answer 13

common law - entitled
UPC - not entitled
A specific devisee 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.
Devisee takes subject to indebtedness