Ademption: When a Specific Gift Leaves the Estate

What Ademption Means for a Specific Gift

Ademption concerns an identified asset, such as a particular property, rather than every gift funded from an estate. Compare a gift of “my property at 10 Example Street” with a direction to pay a beneficiary $100,000. The first identifies property. The second ordinarily creates a monetary gift payable from estate assets.

The Victorian Law Reform Commission’s explanation of ademption distinguishes specific and general gifts. It also explains the difference between a substantive change and a change in name or form. Property that remains substantially the same can survive a change of form without the gift failing.

Read the whole will, including any clause extending the gift to replacement property or sale proceeds. Then compare the description with the property held at death. A different account number or corporate name needs investigation before you conclude that the subject of the gift has disappeared.

Two approaches lead to different results:

• Correct: identify the property described, establish its history and apply the will and relevant exception to the property remaining.
• Incorrect: assume the beneficiary receives the sale price simply because the statements show where it went.

Keep a copy of the executed will and any codicils beside title records and transaction documents. Record whether the disputed wording identifies an asset, creates a monetary obligation or expressly includes a substitute.

Reconstruct the Asset and Sale Proceeds

Trace the sale from the settlement statement through every receiving account and onward payment. A sale contract gives the agreed price. The settlement statement explains deductions, while bank records establish the amount actually received and its later use.

Use a chronological schedule with the source document and page beside each movement. Distinguish transfers between the will-maker’s accounts from spending that reduces their assets. Where proceeds fund a replacement property, obtain its purchase settlement and title records as well as the bank transfer.

A Fictional Property Sale

Suppose a will leaves a particular house to Priya and the residue to Ben. An enduring attorney sells the house before the will-maker dies. This example assumes the following complete transaction history, with no other receipts or interest.

The reconciliation identifies $480,000 remaining from the sale. Moving $300,000 into another account does not spend it. The care payments reduce the proceeds by $180,000.

That calculation does not award Priya $480,000. Her entitlement depends on the will, the governing law and whether an anti-ademption provision applies to this attorney’s transaction. Ben’s competing claim to residue must be assessed on the same legal basis.

If the statements contain unrelated receipts, keep those amounts separate in the schedule. An account’s closing balance alone cannot show how much of the sale proceeds remains. Identify unexplained withdrawals and missing periods without treating them as established spending on care.

FinTrace saves legal teams and forensic accountants hours of statement review by following transfers across supplied accounts. Its searchable ledger and findings report give direct access to the source PDF filename and page for each finding. That helps you assemble the financial history for the entitlement analysis.

Sales by an Attorney or Financial Administrator

Identify the person making the disposal and the legal authority they used. An enduring attorney acts under an appointment. A financial administrator acts under an order. Those roles can attract different statutory provisions, even where both sell a house to fund care.

The following provisions are Victorian examples. They do not establish a national right to the proceeds of every specifically gifted asset.

For enduring attorneys, start with sections 83A and 83B of the Powers of Attorney Act 2014 (Vic). These provisions preserve the relevant interest in money or other property arising from a disposal under the power. The protection concerns property not applied under those powers. It applies whether or not the principal has testamentary capacity.

Section 83A does not require the attorney to keep the proceeds separate from the principal’s other assets. Section 66 still requires accurate records and accounts of financial dealings. Obtain the appointment, its conditions and the transaction records to establish the authority and account for the proceeds.

For financial administrators, section 76 of the Guardianship and Administration Act 2019 (Vic) provides corresponding protection for disposals under powers conferred by an administration order. It concerns money or other property not applied under those powers. Separate banking of the proceeds is not required by that section.

Obtain the administration order and the accounts showing how the sale receipts were used. The order matters because it identifies the powers under which the administrator acted.

A lawful sale to meet the will-maker’s needs can change a beneficiary’s position without showing misconduct. If the evidence raises a distinct authority or conflict issue, examine the attorney’s conduct and supporting records separately.

Prepare the Distribution Decision

Prepare a gift-by-gift comparison before treating traced proceeds as available for distribution to a particular beneficiary. The comparison must connect the financial history with the legal basis asserted by each claimant.

In Victoria, sections 50 and 51 of the Administration and Probate Act 1958 address further consequences of the statutory exceptions. Section 50 permits a beneficiary to apply to the Supreme Court where applying the listed exceptions creates an unjust advantage or disadvantage. Section 51 covers traceable income or capital gain from protected proceeds, to the extent it has not been applied under the relevant powers.

A dispute-resolution brief needs the exact will clause, the appointment or order and the reconciled proceeds schedule. Attach the settlement evidence and source statements supporting disputed movements. Set out each beneficiary’s construction of the clause and the specific order or agreement needed to resolve the allocation.

Record unresolved entitlement separately from the amount of cash the estate holds. Before distributing the asserted substitute, resolve who is entitled to it through the applicable legal process. The wider executor distribution checks follow that decision.