Pitfalls in Distribution

When a testator leaves a specific gift to someone in his or her Will, he or she most likely does not anticipate problems in distribution at the time the estate is administered. Problems do, however, often arise at the time of distribution of the decedent’s assets, such as the property named in the Will no longer existing, including additional assets, or being insufficient to fulfill the bequests—and those conditions are called, respectively, ademption, accession, and abatement.

First, let’s examine the first scenario—that of the property named in a decedent’s Will no longer existing. For example, if A left in her Will a specific piece of real property to B, but at the time of A’s death she no longer owns that specific piece of property, questions will arise as to B’s remedy, if any. This situation is called “ademption.” Whether B is entitled to any relief will depend on the drafting of the Will as well as the interpretive doctrine used by the state where A’s Will is probated. The “identity theory” is the strictest doctrine, which essentially states that since A no longer owns the property, B will not receive it. The “intent theory” is more lenient, and as the name suggests, attempts to carry out the decedent’s intent in making the gift. For example, even though A doesn’t own that specific property anymore, some states using this more forgiving doctrine will attempt to at least pass on the benefit of the property (for example, the sale price) to B.

The second situation, which relates to the property named in the Will including additional assets at the time of death, addresses the issue of whether a gift of specific property also includes additions to that property. This is called “accession.” For example, let’s say A left only the land described above to her B, but the land didn’t have any improvements [i.e., a house] on it at the time she had her Will written. The land, though, did have improvements on it at the time of her death. Does B get the house too? This again depends on the interpretation of the state, and is very often tied to other areas of law. (For instance, in this situation, the property law doctrines of fixtures versus moveable items would be considered—in that “fixtures” are included with the property but “moveable items” are not).

The final situation, which relates to the decedent’s property being insufficient to fulfill the bequests named in the Will, often occurs if the size of the estate simply shrunk over the period between the date of execution of the Will and the date of death. The term “abatement” describes this situation. For instance, if A left her diamond ring to her B, $50,000 to C, and the rest and residue of her estate to her D, but at the time of her death there simply are not sufficient assets in her estate to cover these gifts, Texas laws provide a guide as to which gifts get satisfied first—called the “order of abatement.” If, for example, C’s $50,000 bequest can’t be fulfilled, the court will first look to the property not disposed of by the Will, if any, to fulfill it. Next, it will look to the personal property left in the residuary estate to collect the $50,000. If the personal property in the residuary wasn’t enough, the court will in like manner continue following the chain provided by the statute until the bequest is fulfilled.

Most often, of course, the best solution to these pitfalls at the time of distribution can be resolved by careful and thorough drafting by a qualified Estate Planning attorney. Let the attorneys at Garg & Associates help you in putting together a complete estate plan that takes care of both your primary gifting wishes, as well as your contingent plans for gifting when changes in the assets of your estate occur.

We invite you to contact us for a consultation. Call Garg & Associates, PC at 281-362-2865 or complete our contact form.

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Garg & Associates, PC | 21 Waterway Avenue, Suite 300 | The Woodlands, Texas 77380 Please call 281-362-2865 | Fax: 866-743-4506
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Land, River Oaks, Alief, Stafford, Missouri City, and Southwest Houston Texas.