Which jurisdiction's laws apply when a deceased has assets in several locations? Is it the location of the assets or the location of the individual?
- Condominium Group
- Dec 30, 2007
- 2 min read
Which jurisdiction's laws apply when a deceased has assets in several locations? Is it the location of the assets or the location of the individual?
December 31, 2007
Ideally, a well-drafted Will should remain in effect for years, and be able to account for any foreseeable changes to the Estate. However, it is no secret that theory does not always match with reality. Unfortunately, a common pitfall with respect to Will drafting, which can lead to litigation, is the concept of "ademption".
Simply put, a gift "adeems" (or fails) when the property set out in the Will cannot be ascertained. It may have been given away, lost, no longer in the form that it is described in the Will, or so on.
Some gifts will adeem, and some will not. For these purposes, it is important to set out the difference between different classes of gifts that can be made in a Will:
Specific Gifts - a tangible bequest that usually refers to identifiable property: "To my daughter, my lucky Toronto Maple Leafs sweater."
Demonstrative Gifts - a non-specific bequest but with a clear specification as to the source: "To my nephew John, a $50 gift from my TD Account #XXX."
General Gifts - a non-specific bequest: "To my nephew John, a $50 gift."
Residual Gift - a bequest that comprises remaining property that was not previously earmarked in any particular manner.
The more general a gift, the less likely that it will adeem. The more specific a gift, the greater the possibility that it will adeem. For example, if the lucky Toronto Maple Leafs sweater cannot be found, or no longer exists, the gift fails.
There is a notable exception in the Substitute Decisions Act, 1992 which takes effect if the subject of a specific gift is disposed of by a guardian of property:
36. (1) The doctrine of ademption does not apply to property that is subject to a specific testamentary gift and that a guardian of property disposes of under this Act, and anyone who would have acquired a right to the property on the death of the incapable person is entitled to receive from the residue of the estate the equivalent of a corresponding right in the proceeds of the disposition of the property, without interest.
In other words, if a guardian of property, acting on behalf of our now deceased individual, previously sold the lucky Toronto Maple Leafs sweater, the beneficiary would instead receive an amount equal to its worth - whatever that may be.
Any specific gifts made within a Will should be made on the understanding the property might not be in the hands of the deceased individual at the time of death. A periodic review of the Will is a good idea to ensure that there are no surprises at a later time.
(By the way, I'm not sure there has been such a thing as a "lucky Toronto Maple Leafs sweater" in the past 50 years, but hopefully there will be again soon!)
