Problems Associated with Testamentary Gifts

Question 1

Testamentary Gifts: Types

Answer 1

Specific bequest or devise: testamentary gift of a particular property/item

“I devise Blackacre to my son, John”

Demonstrative legacy: General amount from a specific source or property: “I bequeath 25k to be paid out of proceeds of the sale of my Exxon stock to Sally”

General legacy: Payable out of general assets of the estate

I bequeath 10k to my nephew Ned

Residuary Gift: remainder of testator’s estate after all debts/administration expenses and the above have been paid off.

I give all the rest, residue, and remainder of my estate to B

Intestate property: e.g. partial intestacy because the will, poorly drafted, does not contain a residuary clause

Question 2

Abatement

Answer 2

If all assets that testator owns at death are not sufficient to pay all debts and expenses of administration and also satisfy specific and general legacies in the will.

Order of abatement (personal always goes before real property):

(I)ntesate property (if testator died partially intestate.

(R)esiduary estate

(G)eneral legacies

(S)pecific bequests/devises

Demonstrative legacies likely to be treated same as specific bequests (to the extent of the value of the specified property) and general legacy for any excess

Question 3

Ademption

Answer 3

Devise or bequest of property fails when testator does not own it at the time of death

Can be partial ademption

Question 4

Ademption: Does Not Apply When

Answer 4

does not apply to a general legacy or demonstrative legacy or where the gift consists of traceable sale proceeds

A bequest of “MY 100 shares of ABC stock” is a specific bequest for purposes of ademption, but a bequest of “100 shares of ABC stock” is a general legacy for purposes of ademption.

Question 5

Ademption: Identity Doctrine

Answer 5

ademption is an objective test; testator’s intent is irrelevant

e.g. I bequeath my Toyota to my son.

If Toyota is killed in accident that kills testator, son gets the salvage value of the crumpled Toyota, not the insurance proceeds from it.

Question 6

Testamentary Gifts: Bequests of Stock and Other Securities

Answer 6

Specific devisee of securities is entitled to any additional securities of the same entity owned by testator after the will was executed because of an action initiated by the entity (e.g. stock produced by stock split, stock dividends, new issues of stock due to merger/takeover/consolidation) declared after will was executed, but not cash dividends declared before death (but yes after death)

Question 7

Testamentary Gifts: Specific devise of encumbered property

Answer 7

Exoneration of liens doctrine:

Before Sept 2005:

liens on specifically devised property are exonerated (i.e.debt must be paid out of residuary estate)

After Sept 2005:

Exoneration of liens doctrine does not apply. Beneficiary takes entire property, including encumbrances

If republication by codocil, will is deemed to have been executed on the date of last codocil.