Welcome to a new series where I define terms that are commonly used in estate planning but rarely used anywhere else. First up: lapse and ademption.
Both lapse and ademption describe ways in which a gift made in a will can fail.
Lapse is the term used to describe a gift that fails because the beneficiary cannot accept it. Most commonly, this happens when a beneficiary was alive at the time the will was executed, but passed away before the testator. It also happens when a beneficiary disclaims a gift (more on disclaiming in another post).
What happens to the lapsed gift depends on what kind of gift it was, and whether the gift is subject to any anti-lapse statutes (like Washington State’s statute, RCW 11.12.110). If the gift was a specific bequest, meaning particular property, such as an antique dining table or a specific amount of cash, then that gift will be treated as if the testator never made it, and the property of the gift will instead be distributed with the residual estate (everything that isn’t a specific gift and isn’t used to pay final bills and taxes).
If the lapsed gift was from the residue itself, then it may instead pass through the laws of descent and distribution in intestacy (as if there was no will for that property). This is called a partial intestacy.
However, the anti-lapse statute works to prevent gifts from lapsing for certain beneficiaries. The Washington State anti-lapse statute will prevent a gift from failing if four conditions are met:
There is no requirement that the beneficiary survive the testator,
The beneficiary either does not survive the testator or disclaims the gift,
The beneficiary is a descendant of the testator’s grandparents, and
The beneficiary has surviving descendants.
If all four conditions are true, then the beneficiary’s descendants can take their parent’s place and receive the gift.
When writing gifts in a will, a testator needs to understand what happens if a gift lapses and what effect, if any, the anti-lapse statue will have. It is especially important to name enough contingent beneficiaries to prevent gifts of the residue from lapsing.
A gift can adeem (the verb form of ademption) if the property that is given in a specific bequest is no longer owned by the testator when she or he passes. Because this can only happen to a specific bequest, if the property is no longer owned by the testator, the beneficiary simply receives nothing — not the gift, and not anything in place of the gift.
For example, if Sally’s gifts her grand piano to her sister in her will, but later sells the piano for $2000 and passes away no longer owning the grand piano, then the gift to Sally’s sister fails by ademption. Her sister does not get the piano, and she also doesn’t get the $2000 that was paid for the piano.
If you want to ensure that your estate passes to the people you designate, call Van Pelt Law today to make an appointment. We can discuss your goals, and help craft a plan that ensures your wishes are followed.
