Ademption-failure legacies and gift residue-executorship, Financial Accounting

Ademption

If property which has been specifically bequeathed does not belong to the testator at the time of his death, or has been converted into property of a different kind, the gift cannot take effect by reason of the subject of the gift having been withdrawn from the operation of the will; where a gift fails on this account, it is said to be "adeemed". There must be a substantial change in the subject of a specific legacy to cause ademption and a merely nominal change shall not have that effect.

The gift of an interest in a fund shall not be adeemed by any sale or change of investment of the fund by the persons having control thereof, nor shall it be adeemed by the testator receiving it before his death, whether or not thereafter sold or re-invested by him, if it can at his death be followed and distinguished.

A demonstrative legacy is not adeemed if the property on which it is charged by the will does not exist at the time of the death of the testator, or has been converted into the property of a different kind; in these cases, it is paid out of the general estate of the testator.

Where a testator makes a gift by will to any person for a specific purpose, or to any child or other person to whom he stands in loco parentis (i.e. in the place of that person's parent) by way of portion ("portion" means provision by a parent or person in loco parentis to establish a child in life) and after the date of execution of the will, provides by deed or settlement or otherwise for the same purpose or by way of portion for the same child or other person, there shall be a presumption that the gift is adeemed by the subsequent provision, so far as the subsequent provision extends.

Posted Date: 12/13/2012 4:41:08 AM | Location : United States







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