It’s your birthday! A beloved friend or family member comes to your home, hugs you, and says, “Happy Birthday!” They hand you a beautifully wrapped, large present. Trembling with anticipation, you begin to unwrap it. Off comes the bow and the wrapping paper. You tear open the box, only to discover with confusion and dismay that there’s nothing in it. It’s a gift that’s not a gift. As you can imagine, your relationship with the person who gave you an empty box for your birthday will be diminished. Perhaps, just a bit. Or possibly quite a bit.

No one wants to be the “empty box” person. However, some people inadvertently do the same thing in their estate planning. For example, the fictitious Frank Forgetful executed a Will that declares in part, “My 1964 Ferrari 250 GTO shall be distributed to my nephew, Finley Forgetful.” Several decades pass by, and Frank passes away. Finley reviews his uncle’s Will and is excited beyond words. He’s heard about that gorgeous Ferrari and dreams about getting the keys and taking a road trip down the Pacific Coast Highway. However, unfortunately, Frank forgot that he had distributed the Ferrari to Finley in his Will. He sold the Ferrari three months before his death to help pay for healthcare-related expenses and deposited the funds into his checking account.

Finley is devastated when the estate’s attorney explains that he will not receive the Ferrari due to the concept of ademption. Ademption means that a specific gift set forth in a Will or trust has “failed” because, when the testator dies, he no longer owns the asset to be given. In this case, since Frank no longer owns the Ferrari, he cannot distribute it to Finley. The gift fails, and Finley receives nothing.

Once a Will is created, it’s wise to review and update it periodically to ensure that any assets that are distributed to beneficiaries are currently owned. Otherwise, the estate beneficiaries may be sorely disappointed to receive the equivalent of an empty box.

Do you need assistance in updating your estate planning documents? We’d be happy to help.

This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.

(206) 784-5305