Dear Mr. Premack: My mother was widowed a few years back and she inherited all of my father’s assets. She owned a very lovely home and promised that she would leave it to me, and did write into her Will that the home was to pass only to me. About two years after she signed the Will she needed to move to a nursing home, and my brother sold her house using the power of attorney she had given to him. The money was put into an account and about half of it was spent on the nursing home before she recently died. What I want to know is whether I get the rest of the money in that account because it came from the house, or since it is just money it has to get split between me and my brother (the Will says the rest of the assets, other than the house, are split between us). – N.C.
The legal word for your situation is “ademption”. The concept is that when an item specifically devised in a Will has been disposed of or sold so it no longer exists at the time of the Testator’s death, then the gift fails. The item does not exist as part of the estate, so the heir does not receive it. But the exact wording of the Will is the key. What if mom’s Will said “I give my house at 123 Green Road to N.C.” but she sells it before she dies? The general rule is that ademption applies, but that is not the whole picture.
What if mom’s Will said “I give whatever home I own when I die to N.C.”? When mom wrote the Will her house was at 123 Green Road, but she later sold that house and purchased a new house at 456 Blue Road. Since the new house is “whatever home I own” there has been no ademption and N.C. gets the new house at 456 Blue Road.
What if mom’s Will said “I give the benefit of my house at 123 Green Road to N.C.” but sells the house and carries a note from the buyer and a lien against the house? Does N.C. get the note and lien, or has the gift adeemed since mom sold the house? After all, a note and lien is not the same as the actual house. Depending on the wording of the Will there can be subtle ambiguity about exactly what N.C. is supposed to receive.
The courts look for the ambiguity to decide whether a devise is adeemed or not. For instance, in the Lang v. SAAF case in 1999, the Will gave away the “real property… in my estate… located on Prue Road.” The actual lots on Prue Road were sold while the Will’s maker was still alive. After she died, the heir claimed that she really meant “the real property development on Prue Road” and that he should get the business enterprise even though the land was sold. The appeals court recognized the ambiguity and sent the case back to the trial court for more proceedings.
In the case of Bates v. Fuller, mom’s Will said that the “real estate shall be sold,” the debts and taxes paid, and the “proceeds remaining” passed to the children. The house was sold by mom’s agent while she was still alive. The trial court ruled that since the house was no longer part of the estate on the date of mom’s death, the gift adeemed. It was not available for the Executor to sell and divide the funds; instead, there were only bank deposits on the date of her death, and those deposits would not pass to the children.
They appealed. The appeals court decided that the gift in the Will was not the house itself, but was the proceeds from its sale. It did not matter whether the Executor sold the house or if it was sold before mom died. Either way, the proceeds still existed, and the gift was not adeemed. The children got the money.
Your situation is somewhere in the middle of those two cases. In your letter you do not describe exactly what your mother said in her Will; the exact wording makes a huge difference. Still, the house was sold before she died, and a court could rule that the gift is adeemed. On the other hand, the proceeds from that sale are traceable to the account from which her nursing home expenses were paid. You should consult with a probate litigation specialist about the exact wording of her Will. Depending on what it says, a court may agree that since proceeds were not mixed in with the general estate you are entitled to receive them, or the court may rule that ademption applies and you must split the funds with your brother.
Paul Premack is a Certified Elder Law Attorney practicing estate planning and probate law in San Antonio.
Original Publication: San Antonio Express News, April 16, 2012