Ademption of a specific gift of shares sold before death
Marisol's will, made in 2020, leaves 'my 2,000 shares in Larkspur plc to my niece Inés' and the residue of her estate to a registered charity. In 2024 Marisol sold all her Larkspur plc shares and paid the proceeds into her savings account, where they remain identifiable. She did not acquire any further shares in Larkspur plc and owned none at her death in 2026. She died domiciled in England without changing her will.
Which of the following best describes Inés's entitlement?
Choose one answer to see the reasoning.
Worked answer
Correct answer B: Inés takes nothing, because the specific gift has been adeemed and the proceeds fall into residue.
THE RULE TO REMEMBER
A specific gift fails by ademption if its subject matter is not in the testator's estate at death, unless it has merely changed in name or form.
Ademption of a specific gift of shares sold before death
A gift of 'my 2,000 shares in Larkspur plc' is a specific gift: it identifies particular property that Marisol owned. Under the doctrine of ademption, if the subject matter of a specific gift no longer forms part of the testator's estate at death, the gift fails. HMRC's Inheritance Tax Manual summarises the rule: a specific gift fails by ademption if the property no longer forms part of the estate at death, and a change in the subject matter causes ademption, whereas a mere change of name or form does not. Marisol sold the shares and held cash instead, which is a change in substance, and she owned no Larkspur shares at death. The gift to Inés is therefore adeemed. The beneficiary of a specific gift has no right to trace into proceeds of sale, and the sale money simply forms part of Marisol's estate and passes under the residuary gift to the charity.
Why A is wrong: A beneficiary of an adeemed specific gift has no claim to the proceeds of sale, even if they are identifiable.
Why C is wrong: Ademption extinguishes the gift; it is not converted into a pecuniary legacy of equivalent value.
Why D is wrong: Executors have no duty to replace adeemed property; that would treat a specific gift as a general one.
Why E is wrong: The proceeds are part of the estate and are caught by the effective residuary gift to the charity, so there is no partial intestacy.
A little more practice done.
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