In a prior blog post, I discussed what ademption means in estate administration. In the example set forth in this post, Frank Forgetful’s Will makes a specific bequest of a car to his nephew, Findley Forgetful. However, when Frank sells that car, Findley is out of luck. Frank cannot distribute something to Findley that he no longer possesses.
Abatement is a similar concept to ademption. RCW 11.10.010 sets forth the rules as follows:
(1) Except as provided in subsection (2) of this section, property of a decedent abates, without preference as between real and personal property, in the following order:
(a) Intestate property;
(b) Residuary gifts;
(c) General gifts;
(d) Specific gifts.
For purposes of abatement a demonstrative gift, defined as a general gift charged on any specific property or fund, is deemed a specific gift to the extent of the value of the property or fund on which it is charged, and a general gift to the extent of a failure or insufficiency of that property or fund. Abatement within each classification is in proportion to the amounts of property each of the beneficiaries would have received if full distribution of the property had been made in accordance with the terms of the will.
(2) If the will expresses an order of abatement, or if the testamentary plan or the express or implied purpose of the devise would be defeated by the order of abatement stated in subsection (1) of this section, a gift abates as may be found necessary to give effect to the intention of the testator.
(3) If the subject of a preferred gift is sold, diminished, or exhausted incident to administration, not including satisfaction of debts or liabilities according to their community or separate status under RCW 11.10.030, abatement must be achieved by appropriate adjustments in, or contribution from, other interests in the remaining assets.
(4) To the extent that the whole of the community property is subject to abatement, the shares of the decedent and of the surviving spouse or surviving domestic partner in the community property abate equally.
(5) If required under RCW 11.10.040, nonprobate assets must abate with those disposed of under the will and passing by intestacy.
How does abatement work in practice? Let’s say the fictitious Murray Magnanimous asked his attorney to prepare a Will that had five charitable beneficiaries, each receiving a $100,000.00 charitable distribution. Any remaining amounts were to be distributed to his friend Stan. Unfortunately, Murray dies with an estate totaling $250,000. Murray’s estate cannot distribute $500,000 to charities because the assets are insufficient. Pursuant to RCW 11.10.010(3), a fifty percent reduction will be made in the amount each charitable beneficiary receives. And, according to RCW 11.10.010(1), Stan, the residuary beneficiary, will receive nothing.
When reviewing your estate plan with an attorney, make sure that your proposed distributions match up with your current asset level. If you need assistance in this regard, please let us know. We’re happy to help.
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