When Can a Specific Bequest Fail in a Trust or a Will?

Careful drafting of wills and trusts that clearly specify the intentions of the person creating the will or trust and the nature of their bequest is essential to avoid unnecessary litigation as is demonstrated in this recently published case.

In re Barbara A. Young Living Trust, 2022 WL 1194027 (Mich. Ct. App. Apr. 21, 2022)

Barbara Young died in 2012, and her husband Clemens died in 2008. Barbara’s will included a pour-over provision specifying that all of her property would be transferred to a revocable living trust upon her death. Under a section entitled “Specific Distributions of Trust Property,” the trust provided:

Upon the death of the survivor of me and my husband, CLEMENS H. YOUNG, my Trustee shall make a cash distribution of $50,000.00 to a trust for each of my Grandchildren who survive me (hereinafter referred to as my “GRANDCHILDREN”). The trust for each of my GRANDCHILDREN shall be held and administered by my Trustee pursuant to the terms set forth below.

In a separate section, the trust stated that all property not previously distributed under its terms (i.e., the residuary) should be divided among her children.

One of Barbara’s children, Cynthia, was also the trustee of the trust. In 2019, Barbara’s grandchildren filed a petition to compel the distribution of their $50,000 specific gifts and for the removal of Cynthia as the trustee. Cynthia argued that the $50,000 cash gift to each of the grandchildren failed under the doctrine of ademption because Barbara’s estate included only a parcel of real estate but no cash, relying on a section of the trust that stated: “If the property is not part of my trust property at my death or does not subsequently become trust property, then the specific distribution shall be considered to be null and void, without any legal or binding effect.” The probate court rejected Cynthia’s argument, and she appealed.

The Michigan Court of Appeals affirmed the probate court’s ruling. In its de novo review, the court, in an unpublished decision, noted that its sole objective in resolving an issue regarding the meaning of a trust is to ascertain and effectuate the intent of the settlor. The court found that whether the $50,000 gifts would fail under the doctrine of ademption depended on whether they were specific gifts or general devises, and/or demonstrative bequests, which must be determined based on Barbara’s intention. It noted:

● A general legacy is payable out of the general assets of the testator.

● A specific legacy is intended if the testator wanted the legatee to have the very thing bequeathed rather than a corresponding amount in value: “the identical thing, and that thing only,” and not a gift payable out of the testator’s general assets.

● A demonstrative legacy is a gift of money payable out of a particular fund (e.g., a specific investment account), but if that fund no longer exists, the legacy should be paid in any event.

Ademption occurs when a specific devise expressed in a will is no longer in the estate when the testator dies, and it does not apply to general bequests.

The court held that after considering the language of the trust, Barbara’s instruction to the trustee to make the $50,000 cash distribution to each of her grandchildren was a bequest of a certain value rather than a bequest of a specifically identifiable property that could be distinguished from other articles of the same nature. In other words, it was a general rather than specific devise, and thus, the doctrine of ademption was not applicable. As a result, the bequest should be distributed out of the general assets of the estate, even if the assets did not include cash at the time of Barbara’s death.