If an item that was meant to be gifted to a beneficiary was being managed by a guardian (or someone else with legal
authority because the testator was incapable of managing it) and the guardian sold that item, then the beneficiary would
get cash equal to the value of the item (without interest) from the residual estate.
13.2.1 Anti-Ademption Rule under the Substitute Decisions Act, 1992 (SDA)
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Lesson 1 – Preparing a Will
Meet Barbara, who wrote her will and specifically left:
Everything else (the "residue" - let's say $200,000 in savings) to be split between her other
two children, Mike and Sarah.
Her cottage (worth $600,000) to her daughter Emma;
Her antique car collection (worth $400,000) to her son James; and
Example
The Substitute Decisions Act, 1992, is a statute that governs substitute decision-makers (e.g. a guardian or attorney for
property), who are appointed to make decisions on behalf of a person who is unable to make important decisions.
Section 36 of the SDA has anti-ademption provisions that protect beneficiaries if a guardian disposes of property that is
the subject of a specific gift.
Here’s how it works:
Later, Barbara developed severe Alzheimer's. Her power of attorney, Tim, had to:
Sell the cottage for $600,000 to pay for her care; and
Sell the car collection for $400,000 for additional medical expenses.
When Barbara passes away, here's how it works:
Section 36(1) says Emma and James don't lose their gifts just because the property was sold. They
have a right to the money from those sales:
Emma is entitled to $600,000 (cottage sale proceeds)
James is entitled to $400,000 (car collection sale proceeds)
But here's where Section 36(2) becomes important. The residue (remember, $200,000) isn't
enough to pay both Emma and James their full amounts ($1,000,000 total needed).
So they share the $200,000 residue proportionally:
Emma gets 60% ($120,000) because her gift was 60% of the total ($600,000/$1,000,000)
James gets 40% ($80,000) because his gift was 40% of the total ($400,000/$1,000,000)
Mike and Sarah get nothing because there's nothing left in the residue