[WSBAPT] specific bequest sold before death

[Eric Nelsen]

Ademption of a gift is the key research term. Here’s a chunk of Reutlinger’s Washington Law of Wills and Intestate Succession - Chapter a. changes in property or entitlement Changes In Property or Entitlement (Washington Law of Wills and Intestate Succession (WSBA) (3d. ed. 2018)):


A.2. ADEMPTION

A.2.A. ADEMPTION BY EXTINCTION

If an asset has been specifically given in the will of a testator and it is not in existence or owned by the testator at the time of death, it is said to have been adeemed, or more technically, adeemed by extinction. Only specific gifts can be so adeemed, because general and demonstrative gifts can be satisfied out of general assets of the estate and do not require the existence of any specific assets for their effectiveness. There is a presumption against specific gifts and in favor of general or demonstrative gifts unless a specific gift was clearly intended by the testator.7

In In re Doepke's Estates,8 the testator left to her son "the sum of $3000.00, being the amount of life insurance left by my husband to me, ...." The specific fund that represented the insurance proceeds had been depleted by the time of her death. If the gift had been specific, it would have been adeemed by extinction. Because the testator had left the "amount" of life insurance rather than the life insurance itself, however, the court determined that it was a general gift and therefore not adeemed.

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Under the common law the intention of the testator at the time the gift was adeemed is not relevant to the question of ademption. In other words, when the testator's actions operated to change the form of the asset specifically given, his or her intent (if indeed one existed) in regard to whether that change would constitute an ademption will not be considered.9 What is relevant, however, is what the testator intended to give at the time of making the gift. If the testator intended a gift of money, regardless of where it was held, then a change in bank account will not affect the gift. But if the testator intended a gift of the contents of a specific account and closed the account, there would very likely be an ademption. Use of words like "my 1925 Rolls-Royce" may lead, therefore, to a construction of a specific gift,10 which can then be adeemed by extinction. Without a specific reference such as the word "my," a gift of "a 1925 Rolls-Royce" could well be construed as general; and if the testator had at the time owned a 1925 Rolls-Royce but later sold it, the executor could be required to go out and purchase one to fulfill the general gift in the will.11 (Of course, a gift of "my car" would usually apply to any car the testator owned at death, the will being ambulatory.)12

Other examples of ademption by extinction might involve a gift of specific real property that was sold prior to death, or of a specific automobile that was destroyed and rendered valueless prior to death. In each case the specific asset given was not owned or in existence at the time of death, and therefore the will could not operate to pass that asset.

The more difficult questions arise with assets that have been only partially disposed of or have been exchanged (voluntarily or involuntarily) for other assets. The Uniform Probate Code (U.P.C.)13 eliminates ademption by extinction in a number of areas in which it has traditionally operated. Under the code a specific legatee or devisee will be entitled to:

(1) any balance of the purchase price, together with any security agreement, owed by a purchaser at the testator's death by reason of sale of the property;

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(2) any amount of a condemnation award for the taking of the property unpaid at death;

(3) any proceeds unpaid at death on fire or casualty insurance on, or other recovery for injury to, the property;

(4) any property owned by the testator at death and acquired as a result of foreclosure, or obtained in lieu of foreclosure, of the security interest for a specifically devised obligation;

(5) any real property or tangible personal property owned by the testator at death that the testator acquired as a replacement for specifically devised real property or tangible personal property; and

(6) if not covered by paragraphs (1) through (5), a pecuniary devise equal to the value as of its date of disposition of other specifically devised property disposed of during the testator's lifetime, but only to the extent it is established that ademption would be inconsistent with the testator's manifested plan of distribution or that at the time the will was made, the date of disposition or otherwise, the testator did not intend ademption of the devise.

This approach allows the specific taker to trace the proceeds of certain assets and secure them, even if the specific asset given is no longer owned or in existence. It is presumably based on the assumption that in those cases, a testator would want the specific beneficiary to take the proceeds from the property specifically given. Washington has not adopted the Uniform Probate Code approach, nor, for that matter, any other comprehensive statute on ademption. There are no cases in Washington dealing with voluntary or involuntary conversion of the assets after the execution of the will. From the court's approach in other ademption cases, there is nothing to suggest it would deviate from the common-law approach in this area.14

There is no ademption when property devised by will is made subject to a contractual commitment after the will is executed but before the death of the testator. Under RCW 11.12.060, any "bond, covenant, or agreement made for a valuable consideration by a testator to convey any property, devised or bequeathed" in a prior will is not deemed a revocation of that devise or bequest.15 Instead the property passes to the named taker, subject to the same remedies against the taker as would have been available against the

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heirs or next of kin of the decedent had the property passed to them by intestate succession. In Washington Escrow Co. v. Blair,16 the testator had specifically devised a parcel of real property to a third party and had named his son as the taker of his residual estate. Shortly before his death, the testator contracted to sell the parcel that had been specifically given in the will. The sale was subject to certain financing conditions and the warranty deed, purchase money receipt, and escrow instructions were deposited with an escrow company. The testator died shortly thereafter, and following his death, the purchaser paid the balance of the purchase price and the escrow company recorded the deed for the purchaser. Both the devisee and the residual taker claimed the proceeds of the sale. The court held that the title to the property vested in the specific devisee at the testator's death. The sale was not a "completed transaction," because there were conditions remaining to be fulfilled at the time of death. Under the statute, an executory contract or agreement to sell when there is no conveyance prior to death does not operate as a revocation of the gift made in the will; but in effect the specific taker steps into the shoes of the decedent and undertakes all of the benefits and burdens under the contract.17 If, however, the purchaser had met all of the conditions in the agreement before the death of the seller, fulfilling all of the escrow instructions, and the deed had been delivered from escrow to the grantee (apparently also required by the court), then the property would have belonged to the purchaser at the time of death, and the gift in the will would have been adeemed. The proceeds of the sale then would have passed to the residual taker.

Ademption must occur after the testator executes his will. A testamentary gift is not adeemed by the fact that the property devised was already conveyed to the devisee before the will was executed.18

A.2.B. ADEMPTION BY SATISFACTION

If while living a testator transfers property or cash to a named taker under his will and intends the transfer to be in lieu of the testamentary transfer, the testamentary transfer is "adeemed

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by satisfaction" (or "satisfied") to the extent of the inter vivos transfer.19 The doctrine of satisfaction is sometimes confused with that of advancements, which is a similar concept related to intestate estates.20 Although both doctrines involve gifts to potential takers of the donor's estate, different rules often apply.21 An example of the possible confusion is In re Spadoni's Estate.22 The testator gave his daughter, who was a pecuniary legatee under his will, $1,000 from his bank account. The testimony at trial established that it was the intent of the testator that this gift be considered part of the legatee's testamentary gift. Both the trial court and this court decided, based on the clear evidence of intent, that the gift was an "advancement" and was controlled by RCW 11.04.150 (now subsumed under RCW 11.04.041). That statute, however, refers expressly to gifts "by the intestate" as being advancements, and intestacy has always been a prerequisite to the application of the doctrine of advancements and to the application of the advancement statute.23 Spadoni's Estate did not involve an intestate estate, and therefore the advancement statute should not have applied; rather, the principles of ademption by satisfaction should have been considered. Although it is very likely that, given the clear evidence of the testator's intent at the time the gift was made, the gift in Spadoni's Estate would have been found to be in partial satisfaction of the testamentary gift to the daughter, it nevertheless is unfortunate that the court should perpetuate the misconception that any gift prior to death should be analyzed as an advancement, whether the decedent died testate or intestate. As there do not appear to be any cases in Washington applying the true doctrine of satisfaction, however, it is presently unclear whether in the future the courts will continue to equate satisfaction with advancements and apply (despite its wording) the advancement statute to testate decedents.

If the doctrine of ademption by satisfaction is to be applied at all, the most important element to note is the requirement that the testator have the contemporaneous specific intent to satisfy the testamentary gift. At common law ademption by satisfaction applied only to personal property, and in some states only to pecuniary

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legacies. Intent was presumed in most states if the testator was in loco parentis to the donee or the testamentary gift was for a specific purpose that was accomplished by the testator during his lifetime (for example the payment of a debt).24

It is worth noting that a more modern approach is taken in the U.P.C.,25 and it is aimed at limiting the effect of ademption by satisfaction. The U.P.C. treats an inter vivos gift as ademption by satisfaction only if the will provides for deducting such gifts, the testator declares in a contemporaneous writing that the gift is in satisfaction of a testamentary gift, or the taker acknowledges in writing that the gift is in satisfaction. If indeed the Washington courts adopt the procedures (to the extent applicable) of the advancement statute, they will apply a similar presumption against satisfaction (advancement) "unless shown to be" otherwise.26...

FOOTNOTES:


7 In re Doepke's Estates, 182 Wash. 556, 47 P.2d 1009 (1935); First Interstate Bank of Wash. v. Lindberg, 49 Wn. App. 788, 800, 746 P.2d 333, review denied, 110 Wn.2d 1026 (1987).

8 182 Wash. 556.

9 Atkinson §134; 6 Jeffrey A. Schoenblum, Page on the Law of Wills §54.15 (2003 & Supp. 2016).

10 Atkinson §132.

11 Id.

12 See Chapter 6, §A2.h.

13 Unif. Probate Code §2-606 (2010).

14 Wash. Escrow Co. v. Blair, 40 Wn.2d 432, 243 P.2d 1044 (1952); In re Doepke's Estates, 182 Wash. 556, 47 P.2d 1009 (1935).

15 Under the common law such a gift might have been adeemed. Atkinson §134; 6 Jeffrey A. Schoenblum, Page on the Law of Wills §54.7 (2003 & Supp. 2016).

16 40 Wn.2d 432.

17 Wash. Escrow Co., 40 Wn.2d at 436.

18 In re Estate of Frank, 146 Wn. App. 309, 324-25, 189 P.3d 834 (2008), review denied, 165 Wn.2d 1030 (2009). Therefore, even if the preexecution conveyance is for some reason declared invalid, the gift in the will would still stand. Id.

19 Atkinson §133; 6 Page on Wills §54.21.

20 See Chapter 1, §J.

21 The Uniform Probate Code §2-609 (2010) treats satisfaction essentially the same as advancement (Unif. Probate Code §2-109 (2010)), except as to the effect of a predeceasing ancestor. See Unif. Probate Code §2-609 cmt. (2010)

22 71 Wn.2d 820, 430 P.2d 965 (1967).

23 RCW 11.04.041; Atkinson §129; 6 Page on Wills §55.1.

24 Atkinson §133; 6 Page on Wills §§54.28 - 54.31.

25 Unif. Probate Code §2-609 (2010). See note 21.

26 RCW 11.04.041.




Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Robert R. Cole
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Subject: [WSBAPT] specific bequest sold before death


Mom's Wills over decades provided that daughter (only surviving child) would receive the residence, rest to grandchildren.  It was sold shortly before her death. Most of the proceeds are still in her account. I don't even know where to start research.  Appreciate some help.
--


Very Truly Yours,
Robert R. Cole
Law Office of Cole & Gilday, P.C.

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Stanwood, WA 98292
(360) 629-2900 (Telephone)
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