Ademption is a legal term that describes what happens when specific property bequeathed under a Will is no longer in the decedent’s estate at the time of the death. Such property is considered adeemed, and the gift fails. For example, if a Will bequeaths the decedent’s car to a specific beneficiary, but the decedent does not own a car at the time of his death, the gift would be adeemed and the beneficiary would not receive the car.
Because ademption is governed by state law, its application and enforceability vary from state to state. Common law generally holds that ademption occurs upon the decedent’s death and any proceeds from the sale of property subject to an executory contract should not pass to the specific beneficiary of the property. However, the Uniform Probate Code (“UPC”), which has been adopted by many states, rejects this traditional view, and in certain cases, allows for the sales proceeds to pass to the specific beneficiary.
As evidenced by a recent Georgia Supreme Court case, Melican v. Parker, there is no bright line rule when it comes to ademption. Whether real property is adeemed depends on the laws of the state where the real property is located and the courts’ interpretation and application of such laws.
Melican v. Parker
By way of background, decedent Harvey Strother, a married man, executed three codicils to his Will that favored his mistress, Anne Melican. This case, commonly known as “Melican III,” (since this is the third time Mr. Strother’s estate was before the Georgia Supreme Court) focused on the second codicil. Mr. Strother’s second codicil stated: “If I am still the owner of the Cozumel Condominium…located in Marco Island, Florida, at the time of my death, notwithstanding any provision in my Will to the contrary, that property shall pass to Anne Melican.”
Mr. Strother entered into a contract to sell the condominium, but died before the sale closed. The condominium was nevertheless sold pursuant to this contract. The executor of Mr. Strother’s Estate claimed that Mr. Strother did not own the Florida condominium at the time of his death. Thus, the condominium was adeemed and Ms. Melican was not entitled to receive the sales proceeds. Ms. Melican argued that Florida has adopted the “non-ademption statute” under the UPC, which gave her the right to receive the “balance of the purchase price.” The question before the court was whether Georgia or Florida law applied and whether Ms. Melican was the proper recipient of the sales proceeds.
Analysis of the Law
Under Georgia law, a bequest of real property is construed in accordance with the law of the place where the land is situated. Therefore, the court held that the bequest was governed by Florida law. The Georgia Supreme Court further held that Florida’s non-ademption statute governed, and Ms. Melican was entitled to receive the “balance of the purchase price” owed to Mr. Strother.
There was a strong dissent by three Justices, who relied on the doctrine of “equitable conversion.” Under this doctrine, Mr. Strother no longer owned the property once he signed the contract with the purchaser. The dissent pointed out that the application of the doctrine not only caused Mr. Strother to no longer be “the owner” of the condominium, but also caused Mr. Strother’s interest in the condominium to be converted into personal property, which should be governed by Georgia law, rather than Florida law. Georgia’s “non-ademption statute” applies only to circumstances that are beyond the control of the decedent, i.e. if the property is stolen, lost, destroyed, or condemned within six months of the decedent’s death. Therefore, the dissent felt that Ms. Melican was not entitled to the proceeds from the sale of the Florida condominium. However, the majority concluded that the dissent’s reliance on the doctrine of equitable conversion was erroneous, as it had been overruled by Florida’s non-ademption statute, and held in favor of Ms. Melican.
Despite the court’s ruling in this case, the strong dissent reveals the lack of a bright line rule concerning ademption. Accordingly, Melican III acts as a reminder to all of the importance of making your intentions as clear as possible in your Will or Trust. If you are interested in learning more about this topic within your own estate plan, please contact a member of SGR’s estate planning department.