What happens if I leave a gift in my Will that no longer exists when I die?

Date: May 20, 2012
Document Type: Article

John and Mavis were married. John had one daughter Edwina. In 2001 John made a Will leaving his house to Mavis and the residue of his estate to Edwina. In 2005 John sold the house. John died after the house was sold.

What happens to John’s gift to Mavis? Will Mavis still inherit?

If a will maker specifically gifts an asset that no longer belongs to the will maker at the date of death that gift is said to have ‘adeemed’. Ademption means the gift fails because the specific gift is not owned by the will maker at the time of death so it cannot be gifted. In the example above Mavis would receive nothing under John’s Will.

If John wanted to protect his gift to Mavis he should have drafted his Will so as to make a substitute gift if the house was sold. He should have included a provision which said:

“I give to my wife Mavis my house at 2 Rochester Crescent, Sunny Bay and if that house is sold before my death I give to her the proceeds of that sale.”

He should also advised Mavis of his Will so that she knew the risks involved if she sold the house.

There are a few exceptions to the rule of ademption. One exception is if the nature of asset changes in name only. For example if John left Mavis his shares in ‘Company X’ but he later changed the name of the company to ‘Company Y’ the gift to Mavis would still stand.

Another exception is if the asset is sold without the will maker’s authority. For example if John left Mavis shares in Company X and they were sold by John’s share broker without his authority, then Mavis would inherit the proceeds of that sale.

Section 22 of the Powers of Attorney Act 2003 (NSW) creates a third exception. Under section 22 where an attorney has sells the asset then the beneficiary of that asset retains the interest in the proceeds of sale. Section 83 of the New South Wale Trustee and Guardianship Act 2009 (NSW) has a similar provision if the trustee sells the property.

If you need the assistance of an experienced lawyer drafting your Will or enduring power of attorney, administering an estate or making a claim against an estate call Dominic Wilson on 028268 4000.

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