A lot of people who begin their estate planning aren’t really sure what happens to their property once they create a Will and choose someone to inherit it. Though a Will may feel like a contract between you and the people you’re leaving your property to, they are not the same. Your Will represents your choices, and it does not create an obligation to anyone you choose to leave property to.
If, for example, if you choose to sell everything you identify in your Will and use the money to travel around the world, you can. In this situation you may wonder what happens to the gifts you identified in the Will. In the law this is known as ademption, and it comes in two forms. Let’s take a look at how it works.
Ademption by Extinction
Let’s say you create a Will and leave your prized sports memorabilia collection to your son. After creating the Will you then decide to list all of your collectibles on eBay and sell them to the highest bidder. You then take all the money and buy a new car. In this situation, your son will not be entitled to receive sports memorabilia or the car after you die. Because you got rid of what would have been your son’s gift while you were still alive, that gift is said to have adeemed, or failed.
Ademption by Satisfaction
Let’s say that instead of selling your sports memorabilia you gave it to your son as a graduation present. Once you die you also no longer own the property because your son already owns it. This is known as a ademption by satisfaction.
You can learn more about Wills and estate planning by attending one of our free workshop. Contact our office for more information.