The effect of disposal of assets pre-death (Ademption)
25 September 2020
You can probably carbon date me to a specific time, if I tell you that much of my youth was spent watching Paul Daniels and being amazed by his talents (and his bank balance by all accounts). His catchphrase was “Now that’s magic!”. He did some fine disappearing acts in his day. (If you don’t know him, Google him). This got me thinking about assets that are not there at the date of death.
If the asset is not in existence at the date of death, then, the bequest is said to be adeemed. It fails. The beneficiary doesn’t get the asset. So, it is worthwhile reminding clients of this. Particularly if they wish to give named bank accounts or shares. (Its slightly different with real property as clients tend to remember leaving real property to a particular beneficiary and the effect of ademption). In relation to shares and accounts as these can be easily sold or closed clients may not be as reflective as to the consequences of their closure and sale and its impact on their will. But it is always worthwhile reminding clients about this. Get them to steer away from leaving named bank accounts/shares etc if possible. Its different say with jewellery, cars, paintings and the like. Clients tend to hold onto these.
In relation to real property, it is particularly important to ensure that you have checked that the real property is still owned by the client at the time of making the will. Appropriate checks need to be made. The biggest flaw tends to be not spotting joint property. Failure to check can lead to a negligence action.
The question of ademption can have a big impact in the context of wardship. At times the Wards of Court will require the bank accounts to be closed and funds lodged with the Wards of Court office. You should be conscious of the effect of this on bequests in a will and discuss matters with the Wards of Court office. From my experience they can leave bank accounts in situ so as to prevent ademption and disappointed beneficiaries. Likewise assets forming part of an estate may be required to be sold to fund nursing home care. This can lead to a difficult situation. You may have had the situation where certain beneficiaries in knowledge of the contents of a will are anxious to be appointed as a Committee so to have control over what assets be sold to fund nursing home care (and thus avoid them being subject of an ademption). In addition some on the Committee seek to be appointed to sell assets bequeathed to other family members, solely to manufacture ademption as a means to ensure that beneficiaries are disappointed down the line.
These issues can be difficult to navigate for any solicitor. Obviously the contents of a will cannot be disclosed (unless directed by the Wards of Court office) and you will have to ensure that you are not in a position of conflict. This can be one of the rarer cases where it is helpful, that, for example, a parent testator has given copies of a will to their children beneficiaries. I have had circumstances where the children take a reasonable approach and their principal concern is to ensure that there is adequate funds in place for nursing home care and take on the chin the ademption consequences. You can only have these open discussions where it is clear that the existing will has been freely circulated by your testator client and all beneficiaries are talking and in agreement on the approach.
If you have come across these situations let me know. I’d love to hear from you.