Ademption refers to the elimination of a testamentary gift because the bequeathed asset no longer belongs to the testator's estate at the time of their death.
That’s a bit of a mouthful, so let’s break it down.
What you need to know
Ademption occurs when an asset supposed to be given to a beneficiary in a will no longer belongs to the testator’s estate.
Ademption laws vary from state to state, so there is no one way ademption plays out.
There are two types: ademption by extinction and ademption by satisfaction
There is one main exception to ademption, and it involves insurance.
When a loved one dies, sometimes there is property in the will that is supposed to be given to a particular person (a.k.a. a certain beneficiary), but that property doesn’t belong to the estate anymore.
Imagine a car breaking down and being junked or a vase breaking right before someone passes away, and then the will is never updated after that.
In most cases, that property or the cash equivalent is not passed to the beneficiary, making that particular asset or piece of property “adeemed”.
There are two types of ademption: Ademption by Extinction and Ademption by Satisfaction.
In the case of ademption by extinction, the property gifted to the beneficiary is no longer in the estate, causing it to be adeemed.
Ademption by satisfaction refers to gifts from the testator while they are still alive as an advanced payment from their inheritance. This value could be deducted from the beneficiaries inheritance during the probate process.
The exception to ademption is if the testator’s estate received insurance money from the loss of property. So if someone was supposed to be given a home but it burned down, that beneficiary could still be eligible to receive insurance money in place of the home.
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Learn moreAdemption by Extinction Example
Bill has named his son James as the beneficiary for his car in his will. Three months before he dies, Bill’s car dies and he sells it to a junkyard. Bill passes away soon after, but he never updated his will to reflect that the car is no longer part of the estate. Because of this, the car is adeemed and will not pass to James.
Ademption by Satisfaction Example
In Bill’s will, he left $5,000 to his son, James. However, James received a gift of $4,000 from Bill while he was still alive that was meant to partially satisfy the gift under the will. In this case, James would only receive $1,000 upon the passing of Bill.
In collaboration with
Jack Wilkes
Jack Wilkes is a trust professional and Private Wealth Client Account Manager at Northern Trust Wealth Management in Boston, MA.
Jack received his undergraduate degree in Trust and Wealth Management from Campbell University in North Carolina, along with a minor in Financial Planning. Jack continued his education with an MBA in Financial Services, also from Campbell University.
Jack is a frequent industry writer on trust, wealth management and fiduciary topics.
In collaboration with
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