Learning Outcomes
After reading this article, you will be able to classify testamentary gifts, explain the legal effects of ademption and abatement, and apply the correct order of abatement when an estate is insufficient. You will also be able to identify practical steps for executors and draft advice to minimise the risk of failed gifts—essential for SQE1 exam scenarios.
SQE1 Syllabus
For SQE1, you are required to understand the legal consequences when gifts in a will cannot be made as intended. This article covers the following syllabus points:
- the classification of testamentary gifts (specific, general, demonstrative, pecuniary, residuary)
- the doctrine of ademption and when a specific gift will fail
- the doctrine of abatement and the statutory/common law order in which gifts abate
- the practical implications for executors and beneficiaries when assets are insufficient
- how to advise on drafting to reduce the risk of ademption and unintended abatement
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- Which type of testamentary gift is at risk of ademption, and what is the result if the item is missing at death?
- What is the statutory order in which gifts abate if the estate cannot pay all debts and legacies?
- If a will leaves "my car" to A, but the car is sold before death, what does A receive?
- How can careful will drafting reduce the risk of ademption or unintended abatement?
Introduction
When interpreting a will, you must know what happens if the estate cannot provide all gifts as written. Two key doctrines—ademption and abatement—determine whether a beneficiary receives their intended gift. Ademption deals with the failure of specific gifts that are no longer in the estate at death. Abatement governs how gifts are reduced if the estate is insufficient to pay all debts and legacies. Both are frequently tested in SQE1 and have practical consequences for executors and beneficiaries.
Classification of Testamentary Gifts
Before applying ademption or abatement, you must classify the type of gift in the will. The main categories are:
- Specific gifts: a particular item or asset, clearly identified and separated from the rest of the estate (e.g., "my diamond ring to Sarah").
- General gifts: a gift from the general assets of the estate, not tied to a specific item (e.g., "£5,000 to Tom").
- Demonstrative gifts: a monetary gift to be paid primarily from a specified fund or source (e.g., "£2,000 to be paid from my Barclays account").
- Pecuniary gifts: a gift of a sum of money (can be general or demonstrative).
- Residuary gifts: the remainder of the estate after all debts, expenses, and other gifts have been paid.
Key Term: specific gift A testamentary gift of a particular, identified item or asset, distinguished from the rest of the estate.
Key Term: ademption The failure of a specific gift in a will because the item is not part of the testator's estate at death.
Key Term: abatement The reduction of gifts under a will when the estate is insufficient to pay all debts, expenses, and legacies, following a prescribed order.
Ademption: When a Specific Gift Fails
Ademption applies only to specific gifts. If the exact item is not in the estate at the testator's death, the gift is said to "adeem" and the beneficiary receives nothing.
When Does Ademption Occur?
A specific gift will adeem if, before death:
- The testator sells, gives away, or otherwise disposes of the item.
- The item is destroyed or lost and not replaced.
- The item is fundamentally changed so it is no longer the same asset (e.g., shares in a company that has merged and the original shares no longer exist).
The testator's intention is generally irrelevant—if the item is not in the estate, the gift fails.
Exceptions to Ademption
There are limited exceptions where ademption may not apply:
- If the item is replaced directly (e.g., a car is sold and a new car is bought with the proceeds, and the will refers to "my car"), the court may interpret the gift as referring to the replacement.
- If the item is sold by a deputy or attorney acting under the Mental Capacity Act 2005, the beneficiary may be entitled to the sale proceeds (MCA 2005, s.18(2)).
- If the item is insured and destroyed, insurance proceeds may sometimes be substituted, but only if the proceeds are still in the estate and not mixed with other funds.
Worked Example 1.1
A will leaves "my painting by Turner to my niece, Emma." Before death, the testator sells the painting and does not buy another. What does Emma receive?
Answer: The gift is a specific gift. As the painting is no longer in the estate, the gift adeems and Emma receives nothing.
Worked Example 1.2
A will leaves "my shares in ABC Ltd to my brother." Before death, ABC Ltd is taken over and the shares are converted into shares in XYZ Plc. What does the brother receive?
Answer: If the new shares are a direct substitution for the original shares, the brother may receive the replacement shares. If the change is so substantial that the original asset no longer exists, the gift may adeem.
Exam Warning
Ademption applies only to specific gifts. General or pecuniary gifts do not adeem, even if the testator's assets have changed form.
Abatement: When the Estate Is Insufficient
Abatement determines how gifts are reduced if the estate is insufficient to pay all debts, expenses, and legacies. The order of abatement is governed by statute and common law.
The Order of Abatement
If the estate is insufficient, gifts abate in the following order (unless the will provides otherwise):
- Property not disposed of by the will (partial intestacy)
- Residuary estate
- General pecuniary legacies
- Demonstrative legacies (to the extent not covered by the specified fund)
- Specific gifts and devises (including demonstrative legacies to the extent covered by the specified fund)
Key Term: general pecuniary legacy A gift of a sum of money from the general assets of the estate, not tied to a specific fund or item.
Key Term: demonstrative legacy A gift of a sum of money to be paid primarily from a specified fund or source, but not failing if the fund is insufficient.
Key Term: residuary estate The remainder of the estate after all debts, expenses, and other gifts have been paid.
Practical Application
- Debts and funeral/testamentary expenses are paid first.
- If assets remain, gifts are paid in the order above.
- If assets run out partway through the list, gifts in that category abate proportionally.
Worked Example 1.3
A will leaves:
- "My gold watch to Anna" (specific gift)
- "£10,000 to Ben" (general pecuniary legacy)
- Residue to Carla
The estate has debts of £12,000 and £3,000 cash. What do the beneficiaries receive?
Answer: Debts are paid first (£12,000), leaving £3,000 cash. The general pecuniary legacy to Ben abates: he receives £3,000 (pro rata reduction). The specific gift (the watch) is paid in full if still in the estate. Carla receives nothing as there is no residue.
Exam Warning (Abatement)
Demonstrative legacies are treated as specific gifts to the extent the specified fund exists, and as general legacies for any shortfall. This affects the order of abatement.
Executor Duties and Practical Issues
Executors must:
- Identify and value all estate assets and liabilities.
- Classify each gift in the will.
- Apply the correct order of abatement if assets are insufficient.
- Communicate with beneficiaries if gifts are reduced or fail.
Key Term: executor The person appointed by a will to administer the estate, pay debts, and distribute gifts to beneficiaries.
Drafting to Reduce the Risk of Ademption and Abatement
Careful will drafting can help avoid unintended ademption or abatement:
- Use broader descriptions for gifts (e.g., "the car I own at my death" rather than "my Ford Fiesta").
- Include substitution clauses (e.g., "If I do not own my piano at my death, I give £5,000 to X").
- State preferences for the order of abatement if you wish to depart from the default order.
- Regularly review and update the will to reflect changes in assets and circumstances.
Revision Tip
When advising on a will, always check if the testator's assets are likely to change, and warn about the risk of ademption for specific gifts.
Key Point Checklist
This article has covered the following key knowledge points:
- Ademption applies only to specific gifts; if the item is not in the estate at death, the gift fails.
- Abatement determines the order in which gifts are reduced if the estate is insufficient.
- The statutory/common law order of abatement is: property not disposed of by will, residue, general pecuniary legacies, demonstrative legacies, specific gifts.
- Executors must classify gifts and apply the correct order of abatement.
- Careful will drafting and regular review can reduce the risk of ademption and unintended abatement.
Key Terms and Concepts
- specific gift
- ademption
- abatement
- general pecuniary legacy
- demonstrative legacy
- residuary estate
- executor
