The Difference Between Ademption and Abatement in Estate Claims
Estate claims are filled with legal jargon that few people use in their day to day lives. Abatement and ademption are often terms used in probate and estate claims, but what do they really mean?
Ademption is what happens when someone makes a will and leaves someone a particular gift, and that gift is no longer around when the will maker passes away. As an example, if a will maker leaves someone a valuable gold necklace in their will and they sell that necklace before they die, the gift is said to “adeem”. Once a gift adeems, it is gone. This can also occur if the gift has changed its form. If a willmaker leaves someone a property but later sells that property and buys another, the gift of the original property adeems and that person receives nothing. Similarily if a willmaker leaves a person a fancy art collection and it is destroyed, so too is the gift.
Ademption is not a hard and fast rule, sometimes the law will allow a gift to be saved where the gift has been converted in name or form only and still forms part of the testator’s property at the date of death. This point was expressed by the Court of Appeal in Re Wood Estate, 2004 BCCA 556
(a) A gift of $500 in the Bank of Nova Scotia is a general legacy and is not subject to ademption if the money is withdrawn from the bank. It is just like any other pecuniary legacy; it is payable out of general funds.
(b) A gift of “my account #4378-18 in the Bank of Nova Scotia, Rideau and William Branch” is a specific legacy and adeems if the account is withdrawn or is changed so that it is exists only in a substantially different form.
It seems that a gift of a specific bank account will be adeemed simply by a withdrawal of the money, especially if the money is wholly or partially reinvested or mixed with other money. However, should the money be redeposited in another branch of the same bank or even in another bank, the Ashdown case [Re Ashdown 1943 CanLII 328 (ON CA),  4 D.L.R. 517 (Ont. C.A.)] says that there will be no ademption unless the new account is put in another name or the money is placed in a joint account, so that it can be said the new account is substantially different from the account described in the will. [at §15.54; footnotes omitted.]
Abatement is what happens when certain parts of an estate have to be sold in order to pay debts. This can happen where an estate has a large debt owing to the CRA or the deceased person has a judgment against them. There is a specific order for what gets sold in order to pay debts and it is set out in section 50 of our Wills, Estates and Succession Act
WESA requires that land and personal property like bank accounts must be reduced together, and assets are reduced in the following order:
- a) property specifically charged with a debt or left on trust to pay debt
- b) property distributed as an intestate estate and residue;
- c) general, demonstrative and pecuniary legacies;
- d) specific legacies; and
- e) property over which the will-maker had a general power
As you can see, the residue of the estate is among the first thing that has to be liquidated to pay off debts. Specific gifts, such as where a will-maker leaves someone a piece of property or an art collection, are only liquidated or sold if the residue is empty and there are no general gifts.
If you are an executor of a will, you have a duty to wrap up the estate’s assets and liabilities in accordance with the rules of WESA. Its important to get legal advice about your rights and obligations in doing so.