Testamentary gifts may fail for a variety of reasons. Today, I look at how English and Spanish law classify the reasons for failure of gifts.
This article is a continuation of ‘Testamentary gifts in English and Spanish law’, which I encourage you to read first (if you have not) to get a better understanding of gifts.
Bear in mind that
- ‘English’ refers to concepts, language, texts, etc. from England and Wales only, as opposed to other jurisdictions where they may exist or apply.
- ‘Spanish’ refers to concepts, language, texts, etc. from Spain’s derecho común (subject to the Civil Code) only, and does not include the local laws of specific regions.
Failure of gifts in English law
The term ‘failure’ is used to refer to any situation where a testamentary gift is inoperative or cannot be executed. When considering the reasons why a testamentary gift may fail under English law, it is key to know the distinction between specific and general gifts, as different rules apply.
Specific gifts are gifts of particular things owned by the testator.
General gifts are gifts of things or money which aren’t expressed in the will as owned by the testator.
Here is a general overview of reasons for failure of gifts:
A specific gift will fail by ademption if what is being gifted is not part of the testator’s estate at the date of death. This may be caused by the testator having sold it or given it away, or maybe the object of the gift was destroyed by then – if it is unclear whether the death of the testator or the destruction of the asset occurred first, the destruction of the asset is presumed to have occurred first. The result is that the beneficiary of the said specific gift will not get a compensation.
Only specific gifts may fail by ademption. General and demonstrative gifts do not fail by ademption.
Ademption does not apply, if the subject matter of the gift changed in form, but not in nature. For example, a testator gifts his X number of shares in company A, but company A goes into liquidation and establishes as a new company. The new company keeps the same name and issues a different number of the same type of shares as a replacement. Ademption will not apply, as the new shares are substantially the same.
Beneficiaries are not obliged to receive gifts, and they can disclaim (only after the death of the testator). If a beneficiary disclaims, the property passes as if the gift had failed.
If the gift is only one and undivided, the beneficiary cannot accept just part of it and disclaim the rest; the whole gift must either be accepted or disclaimed. However, the beneficiary can disclaim one gift, if there are separate legacies.
A gift lapses, if the beneficiary of the gift dies before the testator. The gift will then form part of the residue.
An exception to this doctrine of lapse is provided by section 33 of the Wills Act 1837, when a testator leaves property in a will to their children or remoter descendant. It states
(a) a will contains a devise or bequest to a child or remoter descendant of the testator, and
(b) the intended beneficiary dies before the testator, leaving issue; and
(c) issue of the intended beneficiary are living at the testator’s death,
then, unless a contrary intention appears in the will, the devise or bequest shall take effect as a devise or bequest to the issue living at the testator’s death.
A makes a gift to B (child), but B (child) dies before A, and B has a child of their own (C), who is alive at the death of A. Unless otherwise expressed in A’s will, C will inherit B’s gift.
There are important points to note when gifting to joint tenants and tenants in common, which I illustrate with examples below:
Lapse when gifting to joint tenants
If A (testator) makes a gift to B and C (beneficiaries) as joint tenants and B dies before A, B’s share will pass automatically to C (surviving joint tenant). If C (sole surviving joint tenant) dies before A without establishing a substitutional gift, the gift will lapse.
Lapse when gifting to tenants in common
If A makes a gift to B and C as tenants in common and B dies before A, A’s share will lapse.
An exception to the above-mentioned is the approach to class gifts (gifts to an uncertain number of people of the same class who take one single subject matter proportionately). Lapse does not apply to class gifts, and those members of the class who survive the testator will take proportionately, whether the gift is made to them as joint tenants or tenants in common.
The common law created a principle based on public policy to prevent a beneficiary (under someone’s will or under intestacy) from inheriting, if the beneficiary is found guilty of murdering the deceased. This principle has been extended to include manslaughter. Courts have discretion under Forfeiture Act 1983 to grant relief except in murder cases.
When the residuary estate cannot meet all the liabilities of the estate, legacies are reduced proportionately (pro rata). This process whereby legacies are reduced is called ‘abatement’. The abatement rules establish that general legacies abate as a group, and only then specific legacies are used. If general legacies do not suffice, then (after exhausting general legacies) specific gifts abate proportionately.
Beneficiary witnesses the will
If a beneficiary or their spouse or civil partner is an attesting witness of a will, the gift will be void, although the will itself will still be valid. There are exceptions to this rule, which does not apply to, for example, privileged wills, gifts on trust and when a beneficiary was not married to the witness of the will when the will was executed.
A testamentary gift cannot take effect if, after applying a series of rules of construction of wills, there is still uncertainty as to the subject matter or the beneficiary.
An example of failure by uncertainty of subject matter: a testator gives ‘my ring’ but it is impossible to establish which ring they refer to, as they have a box full of rings.
An example of failure by uncertainty of beneficiary: a testator gives something ‘to A. J.’ but they have a son and a nephew sharing the exact same name and nothing in the will or extrinsic evidence can clarify who is to benefit.
Failure of gifts in Spanish law
Bearing in mind that the Spanish Código Civil (Civil Code) does not provide a clear definition of legado (gift), it is not surprising, perhaps, to know that the regulation of specific reasons for failure of gifts in the Spanish Civil Code is scarce.
Here is a general non-exclusive list of reasons for failure of gifts under Spanish law:
Reasons for failure of gifts related to the testator
- Those established in artículos 869.1 y 2 Código Civil.
Artículo 869.1 provides that a gift will fail
where the testator has considerably transformed the subject matter of the gift, and the subject matter has changed both in form and nature.
Artículo 869.2 provides that a gift will fail
where the testator alienates the subject matter of the gift or part of it by any title or cause; where only part of the subject matter is gifted, failure will apply only to that part. If, after alienation, the subject matter of the gift is owned by the testator again, even as a result of nullity of contract, the gift will not have effect, unless repurchase is verified by a repurchase covenant.
- The will or the provision containing the gift has been revoked. The revocation of wills is regulated in artículo 10 Código Civil.
- The circumstances provided by artículo 871 Código Civil:
The gift mentioned in the previous section will expire where the testator, after having made the gift, makes a court claim to order the debtor to pay off his debt, even if the payment has not been made at the time of death.
In a gift of encumbered property made to the debtor, only the right of pledge is transferred.
- The testator ignored that they did not own the subject matter they gifted (artículo 862 Código Civil).
Reasons for failure of gifts related to the legatee
- In a legado puro (not subject to a condition or term), where the legatee dies before receiving the offer of an inheritance (delación); in a legado a término (subject to a term), where the legatee dies before fulfilling the condition precedent (artículo 759 Código Civil).
- The legatee does not have capacity to inherit (artículo 744 Código Civil).
- The legatee is disqualified from inheritance.
A person entitled to inherit will not inherit, if they fall into any of the legal causas de indignidad (grounds for disqualifying an heir from inheritance), listed on artículo 756 Código Civil. Some examples include being found guilty of attempting to kill the deceased, and forcing the testator to make or change a will using threats, fraud or violence.
- Artículo 878 Código Civil establishes that
The gift will fail where the subject matter of a gift was owned by the legatee at the time of execution of the will, even though the subject matter of the gift is later alienated.
Where the legatee acquired the subject matter of the gift free of charge after the death of the deceased, they cannot request anything in return. However, if they acquired the subject matter of the gift for payment, they can ask the heir for compensation.
- In a legado de educación (gift of educational expenses), when the legatee reaches 18 years of age (artículo 879 Código Civil).
- The person who disclaims the gift will not transfer any rights to their own heirs, except in the cases established in artículos 761 y 857 (artículo 766 Código Civil).
- If two or more people have the same full name and their circumstances render it impossible to ascertain who is to inherit, none of them will inherit (artículo 773 Código Civil).
- Any provision in favour of an unknown person (persona incierta) will be void, unless an event can render them certain (artículo 750 Código Civil).
Reasons for failure of gifts related to the subject matter of the gift
- Artículo 869.3 Código Civil provides that a gift will fail
where the subject matter of a gift ceases to exist in its entirety during the testator’s lifetime or after the testator’s death, without the heir being at fault. However, if the gifted subject matter was not specified in kind as per section 860, the person obliged to pay the gift will be held accountable for evicción (the heir’s loss of ownership – as a result of a court order – of the gifted subject matter by virtue of a third party’s prior right).
- Artículo 865 Código Civil provides that
a gift of things which are outside of commercial intercourse will be void.
Things outside commercial intercourse (res extra commercium) are known in Spanish as cosas fuera del comercio. They are not subject to ownership, commerce or trade.
(All English renderings of Spanish Civil Code provisions in this article are unofficial translations by me and provided for information purposes only.)
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IRENE CORCHADO RESMELLA is a Spanish translator based in Edinburgh. A Chartered Linguist and member of the CIOL, she is also an English-Spanish sworn translator appointed by the Spanish Ministry of Foreign Affairs. Irene specialises in sworn and legal translation (particularly in wills and succession) and is an Affiliate member of STEP. ICR Translations is registered with the Information Commissioner's Office and has professional indemnity insurance.