Suppose a person passes away with a will in place. Shortly after his death, his children unseal the will and review its contents. The will states that the deceased’s Maserati, Rolls Royce, Lamborghini, and Ferrari go to his son and his summer home goes to this daughter. The deceased drafted this will several years before he passed away.
As it turns out, the deceased did not own any of those cars at the time of his death. While the deceased was extremely wealthy at one time, he was unable to maintain that wealth. When his businesses started to decline, he sold off his luxury cars and scaled back in general. In place of the luxury cars, he purchased cars that were late model but were not luxury cars.
At probate, the son stated that he wants a corresponding share of the summer home in place of the missing cars. The daughter objected, stating that it was basically a phantom gift in the will. Who gets what?
The California Probate Code recognizes that some items in a will have been adeemed. That is to say, if the will is specific about certain items and those items are no longer here, those items have been “adeemed” and are not part of the will. Thus, in the above scenario, the son would not get anything because the father was specific in his wording about what type of cars would go to the son upon his passing.
Therefore, it is generally a good practice to draft a Will in a way that avoids possible ademption. Instead of stating exactly what type of cars, state “cars in my possession at the time of death” or similar language. This would have allowed the son to take full rights to the cars, be it high-end luxury cars or other cars. While it may be tempting to specify certain items in the will, such specificity might not be the most strategic way to bequeath one’s assets.
Exception to Ademption
While ademption is the law in California, case law tells us that this is not always the case. The exception is based on a case from 1965 wherein the trustee of an elderly person sold certain assets for fiduciary purposes. Some of those assets were assets specified in the will of this elderly person.
When that person died, a will contest erupted. One child claimed that the property had been adeemed because it was no longer in the estate of the deceased and therefore the other child should not be entitled to any corresponding property. A California Appeals Court rejected this notion, stating that a trustee or other fiduciary must, by public policy, be able to act within the best interest of the elderly person. Therefore, there cannot be any incentive, i.e. possible ademption, that interferes with the trustee’s duties. Therefore, the items were ruled not adeemed and the children split the remaining assets.
Considering drafting a will? Speak with the trusts and estates firm of Melanie Tavare, a law firm in Northern California.