There are three types of gifts that can be bequeathed to beneficiaries in a Will. These gifts are typically in the form of:
- A specific gift such as identified property, a motor vehicle or a piece of artwork/jewellery;
- A pecuniary gift in the form of money; or
- A residuary gift typically being the balance of the residue of your Estate.
It is important to understand that if a Will is not correctly drafted, a specific gift can in fact fail. In these circumstances, ‘the rule of ademption’ applies.
What is Ademption?
Ademption occurs in circumstances where a specific gift or asset is bequeathed to a beneficiary however at the time of death the asset is no longer owned by the deceased.
A common example is the specific bequeath of a motor vehicle where it is no longer an asset of the deceased.
There are exceptions to the concept of ‘ademption’. There are three circumstances where the ‘rule of ademption’ may be excluded;
- If the nature of the asset changes in name only, a common example is where a bequest of shares occurs however the name of the company has changed between the date of execution of the Will and the date of death.
- If the particular asset is sold without the will-makers authority.
- Pursuant to Section 22 of the NSW Powers of Attorney Act 2003, where the Attorney sells the asset that was gifted to a beneficiary.
In these circumstances, the beneficiary will still retain the interest of the proceeds of such sale. If you are in a position where you need to get your affairs in order or are unsure if you have specifically bequeathed particular items to your beneficiaries, please contact one of our family law specialists.
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