The world of estate planning is full of some very specific terms. If you come across some strange language it’s best to ask your estate planning attorney what the term means and how it applies to you. In the meantime, you can educate yourself so you won’t be caught off-guard if you ever come across confusing terminology. Let’s take a look at one of these terms, ademption, and look at what it means and how it affects you.
Let’s say you’ve created a last will and testament in which you have left your 1965 Mustang convertible to your daughter. After you make the will you then decide to sell the car to someone else and use the money to go on a vacation. When it comes time to distribute your property after you die, the will still states that your daughter should receive the car. What happens? In this situation, since you no longer have the property that you specified in your will, your daughter won’t receive it. This is known as ademption.
Extinction and Satisfaction
There are two types of ademption: extinction and satisfaction. The example above is an example of ademption by extinction, meaning the property isn’t there to distribute once it comes time to settle the estate. Instead of the above situation, let’s say that you didn’t sell the car but instead decided to give it to your daughter on her 21st birthday. This is known as ademption by satisfaction, because when it comes time to distribute your assets after your die your daughter has already become the owner of the property she would have inherited.