We all have objects of sentimental value which we may want to leave to a loved one when we die. It would be a family heirloom, a piece of jewellery or maybe even that luxury car that you own. In your Will you can choose to make a specific “devise” of this property such that upon your death, ownership of that asset is given to a particular beneficiary.
A specific gift is distinguished to that of a “residuary” gift where all of your remaining assets are distributed after payment of all debts, costs and liabilities.
An example of a specific gift would be where Craig Daniel:
I give my Aston Martin DB5 to my friend James Band.
There can however be some problems with leaving a specific gift in your Will and there are things to consider when drafting a Will to avoid these.
The main issue to discuss is that of ‘ademption‘.
Ademption
When a specific gift in a Will fails because the particular asset (such as the Aston Martin) is no longer owned by the willmaker as at the date of their death, there is a general principle called ademption which occurs. This is essentially where the Will is read as though the gift was never included in the Will at the time it was drafted.
In the example above, what happens should Craig have sold the Aston Martin before he died? The simple answer is that the gift is ‘adeemed’ and James misses out and does not receive the gift. In this situation it is assumed that Craig knew the gift was in his Will and sold the car regardless however, should the car have been sold by someone under a Power of Attorney, the courts have provided some exceptions to the ademption rule.
The ultimate outcome of ademption is not to get a substitute asset, but to get no asset at all.
Is there another way?
Preventing ademption comes down to the drafting of your Will which needs to contemplate whether you wish the gift to lapse should it no longer be owned as the date of death or, whether a substitute or alternate provision is made should this be the case.
People may take ownership and sell assets constantly and to update our Wills every time there is a change could work out to be quite costly. As an alternative, it might be more appropriate to have a ‘memorandum of wishes’ or a ‘letter of wishes’ which provides your executors non-binding instructions on how particular assets are to be dealt with.
How can Nevett Ford help?
Our Wills and Estates Team are here to assist our clients with the preparation of their Wills and will work with you to ensure your assets are protected and dealt with as you wish. Please contact us on 03 9614 7111 or at melbourne@nevettford.com.au should you wish to discuss this further.