Causes of failure of legacies and gifts of residue, Financial Accounting

CAUSES OF FAILURE OF LEGACIES AND GIFTS OF RESIDUE

1) 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into property of a different kind, the gift cannot take effect by reason of the subject of the gift having been withdrawn from the operation of the will; where a gift fails on this account, it is said to be "adeemed".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.

2) Uncertainty:
A gift or disposition not expressive of any definite intention shall be void for uncertainty, i.e A gift under a will fails where there is uncertainty as to:What is being given, To whom it is being given, or The quantity of the interest being given.

3) Disclaimer:
A beneficiary can always disclaim a legacy and probably would do so if the gift involves onerous conditions. He may also do so when he wishes to increase the share of residue passing to some other beneficiary.

4) Lapse:
If the legatee pre-deceases the testator, the gift fails; it is said to "lapse".

5) Gifts subject to an illegal condition:
A gift will fail if it has an illegal condition attached to it.

6) Gifts subject to a condition which is contrary to public policy:
Where a gift is subject to a condition which is contrary to public policy, the gift will not fail but the beneficiary will take without the condition.

7) Abatement:  In case the legacy is not adequate to meet all the dues of the beneficiaries, the dues will be reduced in proportion to what is available fro the legacy.

Posted Date: 12/13/2012 4:36:32 AM | Location : United States







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