Every so often a Will maker leaves a specific gift in their Will and at the time of death it is no longer owned by the Will maker. This specific gift fails for “ademption”.
What is ademption?
Ademption occurs when property (either personal or real estate) gifted under a will is no longer in the will maker’s estate when they die. A common example is when a Will maker leaves a property to a beneficiary and at the date of death the property has already been sold. As a result, the beneficiary who has been left that property misses out.
Exception to ademption
In Victoria, there is an exception to ademption for property dealt with by an attorney or administrator. Ademption will not apply when:
- a property is lawfully sold on behalf of a will-maker by an administrator (guardian) of an estate as appointed by VCAT 1 or
- a property is lawfully sold on behalf of a will-maker by an administrator or person acting under an enduring power of attorney2.
Therefore, under these provisions a beneficiary that has been left a property in the Will that has been sold by the Attorney or Administrator would be entitled to receive any money identifiable as the proceeds of sale of the property.
If the exception to the ademption causes an unjust advantage or an unjust disadvantage to a beneficiary, the Court has the power to remedy this.3 If the Court is satisfied the Court may make any order it thinks fit to remedy the unjust advantage or unjust disadvantage.
To determine whether ademption has occurred, the Court is required to ask two questions:
Is the gift a specific gift or a general gift?
This was discussed in the recent case of Re Moran [2022] VSC 776.
Re Moran [2022] VSC 776
Facts
The deceased died on 22 July 2020, leaving a will dated 24 September 1976.
Probate was granted to the deceased’s brother, Ronald in April 2021. Ronald died on 5 November 2021. At the time of Ronald’s death the administration of the deceased’s estate had not been completed.
On 1 April 2022, Ronald’s son Paul obtained a grant of probate of Ronald’s will. As a result, this meant that Paul was also the executor of the deceased’s estate.4
In the deceased’s will, there was a clause which provided:
“I GIVE DEVISE AND BEQUEATH the whole of my estate both real and personal whatsoever and wheresoever situate unto my wife NOLA MORAN provided she shall survive me by thirty days …”
“… I GIVE AND DEVISE the real estate owned by me to my son GEOFFREY WILLIAM ARTHUR MORAN.”
The deceased was predeceased by his wife Nola and his son Geoffrey. Geoffrey had two children, Kylie and Aaron Moran who were entitled to any benefit Geoffrey would have received had he survived the deceased. Therefore the Kylie and Aaron were to receive the gift of “real estate owned by me“.
At the time the deceased made the Will he owned the property at 8 Thorpe Street, Newport (Thorpe Street property).
In or about 2005, the deceased developed dementia and on 22 February 2017, VCAT appointed administrators to manage the deceased’s financial and legal affairs.
In late 2017, Nola issued proceedings in the Family Court of Australia and the deceased was ordered to sell the Thorpe Street property and the net balance to be divided equally between Nola and the deceased. The Thorpe Street property was sold by the deceased’s administrators pursuant to their appointment by VCAT. It sold for $1,280,000.
At the date of death the deceased’s estate was valued at $687,657.93
Proceeding
Kylie and Aaron made an application in the Supreme Court seeking declarations that they are entitled to receive most of the deceased’s estate as it represented the deceased’s share of the proceeds of the Thorpe Street property.
Kylie and Aaron argued that the gift to Geoffrey under the will of ‘the real estate owned by me’ should be interpreted as a specific gift of the Thorpe Street property . Therefore the exception to the principle of ademption should apply and hence the proceeds of sale of the Thorpe Street property would pass to them.
Paul, the substituted executor of the deceased’s estate argued that the gift of ‘the real estate owned by me’ is to be construed as a generic gift applying to all of the deceased’s interest in real property as at the date of his death. Therefore, the exception to ademption does not apply to the sale of the Thorpe Street property .
Decision
The Court had to determine whether the gift to Geoffrey was a specific gift to which the principle of ademption would apply, or whether it is a general gift of all real estate owned by the deceased at the time of his death. The Court’s task was to construe the meaning and effect of this particular gift in the circumstances of the deceased’s will.
The Court made the following comments:
- The plain meaning of the gift of ‘the real estate owned by me’ would capture any and all real estate owned by the deceased upon his death. It refers to a generic type of property and does not on its face identify any specific properties owned by the deceased at the time he made the will;
- The Court referred to Lord Romer in Perrin v Morgan5, that it is a cardinal rule of construction that a will should be construed so as to give effect to the intention of the testator, gathered from the language of the will read in light of the circumstances in which it was made.
- However, the Court noted that given the words used in the will and the lack of evidence in relation to the deceased, such an inference cannot be made. The deceased was only 48 years old when he made the will and there is no evidence of the state of his health or his financial position at that time. The surrounding circumstances did not evince that the deceased intended to specifically bequeath the Thorpe Street property to Geoffrey, rather than making a gift of any real estate he may have owned upon his death.
The Court held that on its proper construction, the gift to Geoffrey is generic in the relevant sense, as it carries any and all real estate owned by the deceased upon his death. As such, the gift was not adeemed by the sale of the Thorpe Street property.
Takeaways
This case highlights the importance of having your Will carefully drafted so it reflects your intentions in respect to specific gifts you wish to leave to beneficiaries. It also highlights that you need to consider reviewing your Enduring Power of Attorney document in respect to your attorney being able to sell particular assets.
Hunt & Hunt’s experienced Wills & Estate Lawyers can assist you in updating your Will and or Enduring Power of Attorney. Our lawyers can also advise you on the merits of disputing a Will regarding a property which you are entitled to that was disposed of prior to the deceased’s death.
[1] Section 53 of the Guardianship and Administration Act 1986 (Vic)
[2] Since 2017, section 83A of the Powers of Attorney Act 2014 (Vic)
[3] Section 50 of the Administration and Probate Act 1958 (Vic)
[4] Pursuant to s.17(1) of the Administration and Probate Act 1958 (Vic)
[5] [1943] AC 399, 420
