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The failure of a gift of personal property—a bequest—or of real property—a devise—to be distributed according to the provisions of a decedent's will because the property no longer belongs to the testator at the time of his or her death or because the property has been substantially changed.
There are two types of ademption: by extinction and by satisfaction.
Ademption by extinction occurs when a particular item of Personal Property or specially designated real property is substantially changed or not part of the testator's estate when he or she dies. For example, a testator makes a will giving her farm to her nephew and a diamond watch to her niece. Before she dies, she sells the farm and loses the watch. The proceeds of the sale of the farm are traced to a bank account. After the testator's death, the nephew claims the proceeds from the sale and the niece claims that the executor of the estate should pay her the value of the diamond watch. Neither claim will be upheld. Once the farm is sold, the specific devise is adeemed by extinction. The proceeds from its sale are not its equivalent for inheritance purposes. In some states, however, if all of the proceeds had not yet been paid, the nephew would be entitled to receive the unpaid balance.
Since the testator no longer owns the diamond watch when she dies, that specific bequest is also adeemed by extinction.
Ademption by satisfaction takes place when the testator, during his or her lifetime, gives to his or her heir all or a part of the gift he or she had intended to give by his or her will. It applies to both specific bequests and devises as well as to a general bequest or legacy payable from the general assets of the testator's estate. If the subject of the gift made while the testator is alive is the same as the subject of a provision of the will, many states presume that it is in place of the testamentary gift if there is a parent-child or grandparent-grandchild relationship. Otherwise, an ademption by satisfaction will not be found unless there is independent evidence, such as express statements or writings, that the testator intended this to occur. A father makes a will leaving his ski house to his daughter and $25,000 to his son. Before death, he gives the daughter the deed to the ski house and he gives the son $15,000 with which to complete medical school. After the father's death, the daughter will get nothing, while the son will get $10,000.
After the son received the $15,000 from his father, there was an ademption by satisfaction of the general legacy of $25,000 to the extent of the size of the lifetime gift, $15,000. The son is entitled to receive the remaining $10,000 of the original general legacy. Since there was a parent-child relationship, there was no need for independent proof that the $15,000 gift was intended to adeem the gift under the will.
Lundwall, Mary Kay. 1993. "The Case against the Ademption by Extinction Rule: A Proposal for Reform." Gonzaga Law Review 29 (fall) 105–32.
Volkmer, Ronald R. 2000. "Doctrine of Ademption in the Law of Wills." Estate Planning 27 (March-April): 136–37.