Ademption: More than Just a Word Your Spell-Check Doesn't Recognize

What happens when someone bequeaths a specific asset to a beneficiary but, when the testator dies, the asset is gone? That is one of the questions addressed by New Jersey's intermediate appellate court in an unpublished decision handed down this week, In the Matter of the Estate of Louis S. Grant, Sr., Deceased, Nos. A-0078-09 and A-0079-09.

Louis S. Grant, Sr. ran a successful “horse tack” and “horse auction” business during his lifetime, assisted in varying degrees by his son and two daughters. At the time of Mr. Grant’s death, his most recent Will devised to his son “so much of the tack and inventory as I may die possessed of” in the horse tack business. However, prior to his death and after signing his Will, Mr. Grant liquidated the inventory of the tack business, and deposited the funds into a business account.     

Immediately upon Mr. Grant’s death in 2001, his surviving adult children began a course of litigation that continues to this day, and will continue into the foreseeable future. 

  

One of the issues for the Appellate Division to consider was whether Mr. Grant’s liquidation of the inventory of the tack business (worth close to one million dollars), was evidence that he intended to override the specific bequest of the inventory to his son. The daughters argued that it did, and that the funds should be considered an asset of the Estate to be distributed to all the beneficiaries. The son argued that his father held those funds aside to satisfy the specific bequest to the son under the Will.

 

In determining questions such as these, our state Supreme Court has instructed judges to pull out their crystal ball, tarot cards and tea leaves, and to determine the “probable intent” of the testator. In other words, courts look at the Will and any other relevant documents, view the extant circumstances as a whole, and determine what someone such as Mr. Grant would do if he were still around to make these decisions. 

 

The Appellate Division concluded here that Mr. Grant would have simply handed over the proceeds from the tack inventory to his son, as suggested by his Will. Aside from looking at the son’s involvement in the business, the Court cited a statute defining a doctrine called “ademption by satisfaction,” which, essentially, states that property a testator (such as Mr. Grant) gives in his lifetime is treated as a satisfaction of a bequest under certain circumstances, including where the recipient acknowledges in writing that the “gift” stands in the place of the specific bequest. Here, the mere fact that Mr. Grant converted the tack into cash did not suggest that he had changed his mind with respect to giving the inventory to his son.

 

Since it is not published, the Appellate Division’s opinion is not binding precedent on other courts faced with these issues in the future. However, in addition to adding to our vocabulary, the Appellate Division’s analysis may be instructive in the event that you are named as a beneficiary who is to receive an asset which has since been liquidated. And, for those of us thinking about making or updating our Wills, we should be certain to update them to reflect the current state of our circumstances.

 

But, alas, our heirs will sometimes simply fight for ten years anyway.

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