Legacies, residue and ademption in estates

Senior Legal Adviser at Sanlam Trust, Dave Thomson, shares another story that his team has encountered to better highlight the services that they provide. This time we look at why it’s important to have your will up to date in relation to ademption.

Ademption occurs when the bequest of an asset mentioned in a will is revoked due to the asset being sold, destroyed or given away by the deceased before they die. If the bequest is not revoked voluntarily, for example the asset was subject to judicial attachment, then ademption is not inferred and the onus of proving ademption lies with the person who claims the legacy must fail.

In a recent case handled by Sanlam Trust, a client, *Mr Ings, bequeathed specific, valuable assets to his children in his will executed in 2001. However, when he died, he no longer owned either of the assets bequeathed to his children.

In his will, he made, amongst others, the following bequests:

1.    “My Maserati motor car to my daughter Liv Ings; and

2.    the property situated at 555 Sunset Boulevard, Blouberg, to my son Bob Ings and

3.    the residue of my estate to my wife, Love Ings, whom failing to all our children in equal shares.”

Mr Ings, however, sold his Maserati in 2016 after his health took a turn for the worse and acquired a smaller car, a Suzuki. In 2018 he then sold the Blouberg property to a third-party buyer and moved into a retirement home on a rental basis. In addition, his wife passed away before him, leaving his children to inherit the residue of his estate.

With regards to point three above, there was no dispute about the children as he was married once and the children were from that marriage. The bone of contention arose from points 1 and 2.

According to the law, a legacy will fail if it is adeemed. In this case, Mr Ings sold both assets listed in his will. In all instances, the intention of the testator must be determined and to that end, all surrounding circumstances are to be considered.

In the case of the Ings’ Estate, there are a few legal points to clarify. First, legacy. A legacy is a bequest of a particular thing (including money) to a person or group of persons who are  known as the legatee or legatees. A legatee differs from an heir in that an heir is a person who succeeds to the residue of the estate (or a specified portion thereof) after all liabilities, costs, fees and taxes (including estate duty) have been paid and the legacies distributed. If a legacy is specified as a ‘pre-legacy’ – as the name implies – it must be paid before other legacies, including before the residue.

If an estate comes up short as far as liquidity is required to meet all liabilities, costs, fees and taxes the heirs – even legatees – can be required to ‘abate’, in other words to take a ‘cut’ on their inheritance pro rata to their share.

In the case of the Ings estate, the two legatees – Liv Ings and Bob Ings – took differing positions. Liv insisted that the executor deliver the Maserati or alternatively, give her the Suzuki. Discussions were held between both parties, where it was agreed that ademption had taken place and there was no evidence that her father had intended her to receive the vehicle he had bought in its place. The heirs, Liv and Bob, eventually agreed to a redistribution of the estate, and Liv received the Suzuki as part of her inheritance.

Bob, on the other hand, claimed that ademption had not taken place in his legacy. He had to submit motivation based on legal precedent to support his claim. Bob based his claim on the fact that the nett proceeds of the sale had been invested in a distinct investment and he argued that he should receive that investment. He further engaged an attorney to act as his representative.

The attorney then engaged with us and in a civil manner, we were able to come to an agreement that the legacy for the Blouberg property had indeed failed and that the property formed part of the residue. This did lead to some tension in the family, however, we were able to resolve it without costly litigation which would have also just caused delays.

This situation highlights the necessity of regularly updating your will, especially when significant assets are disposed of. Of course, if the intention is to substitute a particular legacy with another asset in its place, the testator must state so in his will. For example: “I bequeath my property at… or whatever immovable property I own at my death… or the proceeds of the sale…to my son”.

Do be aware, though, that if ademption is found to not have taken place, the executor must buy the asset back or, if unable to do so, pay its value to the legatee. It can also lead to a liquidity crisis if the executor does not have estate funds to acquire the asset from a third party.

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