14.0 Classification of Legacies

14.1 In General
14.2 Operation and Effect
14.3 Ademption
14.4 Survivorship and Anti-Lapse
14.5 Simultaneous Death


14.1 In General

Maryland law recognizes three types of bequests: specific, demonstrative, and general. In Chalkwater v. Dolly, 108 Md. App. 539 (1996), the three types are defined and distinguished from one another. A specific legacy is:

"[T]he bequest of a particular thing, or money, specified and distinguished from all others of the same kind, as of a horse, a piece of plate, money in a purse, stock in the public funds, a security for money, which would immediately vest with the assent of the executor."

Id. at 543-44, quoting England, Ex'r v. Vestry of P. George's Par., 53 Md. 466, 468-69 (1880). "[T]o constitute a specific bequest, there must be 'a segregation of the particular property bequeathed from the mass of the estate, and a specific gift of a specified portion to the legatee'." Id. at 544, quoting Miller v. Weber, 126 Md. 658 (1915).

In contrast, a general legacy is:

"One which is payable out of the general assets of the estate of the testator, being a bequest of money or other thing in quantity, and not separated or distinguished from others of the same kind."

Id., quoting Shamberger v. Dessel, 240 Md. 650 (1965).

Demonstrative legacies are characterized as follows:

"Demonstrative legacies partake of the characteristics of both general and specific ones. They are general in nature, but a certain fund or piece of property is pointed out as being primarily charged with their payment. The fund or piece of property (subject, of course, under certain circumstances to possible indebtedness, etc., of the testator) is primarily liable for their payment, but, due to their 'general' nature, if the fund or piece of property proves insufficient to pay them, the legatee may receive payment out of the general assets of the estate."

Id., quoting Shamberger, 240 Md. at 655.The Restatement defines demonstrative bequests as a testamentary disposition which is primarily payable from a designated source, but is secondarily payable from the general assets of the estate to the extent that the primary source is insufficient. Examples include "a devise of '$5,000 out of my bank account,'” or of “$10,000 from the proceeds of the sale of my X-Y-Z bonds.” If, however, the devise indicates that it is to be paid only from a designated source (i.e., a devise of “$5,000 out of my bank account if that much money is on hand at my death”), the devise is specific and not demonstrative. Restatement (Third) of Prop.: Donative Transfers § 5.1 cmt. d.

14.2 Operation and Effect

A specific bequest fails entirely if the specified property no longer exists. This and other characteristics, "have long led the courts to prefer to construe a bequest as general or demonstrative, rather than specific. Such a construction not only avoids the harshness of failure where the specified property no longer exists but provides more flexibility in the use of estate assets to satisfy debts and other legacies.” Chalkwater, 108 Md. at 545.  Indeed, Maryland courts stated that a will should not be construed as containing a specific bequest unless the language imperatively requires it. See id.  

Maryland law provides for that an order of abatement pay estate expenses. The statute operates except when a contrary intent is expressed in the will, the surviving spouse elects the spousal share, or share is required to be paid to a pretermitted child. Legacies abate without preference or priority between real or personal property in the following order:

•    Property not disposed of by the will
•    Residuary legacies
•    General legacies (other than those exceptions noted by § 9-103)  
•    General legacy to dependents of the testator
•    General legacy to a creditor of the testator to satisfy a just debt
•    General legacy to surviving spouse of the testator
•    Specific and demonstrative legacies

Md. Code Ann. Est. & Trusts § 9-103.

The classification of a certain legacy as a general or specific legacy is of paramount importance when applying the abatement statute.

"Needless to say, in order to determine the legacies which necessarily abate first under our statute by reason of their being insufficient assets to fully settle all creditors claims, the cost and expenses of administration, and all legacies, it is necessary to classify each dispositive provision of a will to determine whether it constitutes a residuary legacy, a general legacy, or a specific or demonstrative legacy. While there is no simple formula to perfectly effect such a classification, each form of legacy has established characteristics in law which offer substantial assistance in distinguishing one from another."

63 Op. Att'y Gen. Md. 637 (1978).

The Uniform Probate Code provides a more general classification for abatement purposes. Under § 3-902, the order for abatement is as follows: (1) property not disposed of by the will; (2) residuary devises; (3) general devises; (4) specific devises. The Maryland formulation is a more nuanced approach. Unif. Probate Code § 3-902 (1974).

A secondary consideration as to the classification may also be present. For example, Maryland law provides that a specific legacy shall receive distribution of the legacy in kind. Md. Code Ann., Est. & Trusts § 9-104. A residuary legacy is to be distributed in kind provided there is no objection to the proposed distribution, or when it is practicable to distribute undivided interests in kind. Id. In every other case, residuary legacies may be converted to cash for distribution. Id. The bias in favor of preserving specific property is reflected in Maryland’s Uniform Principal and Income Act, Md. Code Ann., Est. & Trusts § 15-503. If costs are properly attributable to specific property and the receipts are not sufficient to pay those costs, the personal representative shall demand that the beneficiary contribute sufficient funds to cover their costs. Alternatively, if the beneficiary who is to receive the specific property fails to make payment to the personal representative within 15 days from the date of written demand, the personal representative may sell the property. Id.

Under § 4-406, a legacy of specific property passes subject to a security interest or lien on the property which existed at the time of the execution of the will or which is a renewal, extension or refinancing of such lien, unless a counter intent is expressly indicated in the will. Md. Code Ann., Est. & Trusts § 4-406. If the security interest attaches after the execution of the will, the legatee is entitled to exoneration. In Carruthers v. Buscher, 38 Md. App. 661 (1978), the Court of Special Appeals traced the evolution of this rule.

"Until 1969, Maryland followed the common law with respect to exoneration. At common law, the personal estate of a testator was the natural and primary fund for the payment of debts. This meant that, even when real estate was expressly charged with the payment of a debt (e.g., subject to a mortgage), no resort could be had to the realty for the payment of the debt unless and until the personalty was exhausted. Thus, absent exoneration by the testator (exoneration of the personalty), an encumbrance on real estate would be paid from the personally in the estate; and, to the extent the personalty was sufficient, the real estate would pass free of the encumbrance. All of this was explained by the Court of Appeals in Tobiason v. Machen Exec., 217 Md. 207 (1958).

Exoneration, the Court said, may be accomplished 'by the express terms of the will or by reasonable and satisfactory implication therefrom.' It is clear from Tobiason, however, that the phrase 'reasonable and satisfactory implication' was to be narrowly construed. Quoting from Miller, Construction of Wills, § 387, the Court noted that 'very clear expressions are required in order to fasten the incumbrance on the property', and that a devise of real estate 'subject to a mortgage' with not a sufficiently clear expression…

In late 1968, the Second Report of the Governor's Commission to Review and Revise the Testamentary Law of Maryland (generally known as the 'Henderson Commission', after its Chairman, retired Chief Judge William L. Henderson) was reported to the General Assembly. Attached to the Report – indeed, comprising the Report – was draft legislation to rewrite entirely the testamentary law of the State, then codified primarily in Article 93 of the Code, along with the Commission Comments explaining each section of the proposed new law. The Commission accepted the Court's ten-year old invitation, and recommended a substantial modification of the common law doctrine of exoneration. This appears as proposed § 4-406, which was adopted by the General Assembly without change…

Since the mortgage in question existed prior to the execution of the will, Mr. Wright is not absolutely entitled to exoneration. The question, therefore, is whether a 'contrary intent' – i.e., an intent to exonerate the real estate – 'is expressly indicated'?"

Id. at 666-68.

14.3 Ademption

Another result of the classification of legacies is the operation of ademption. If a will contains a specific bequest rather than a demonstrative bequest and the specific property no longer exists at death, the general rule is that the legatee does not take. Altering the common law rule, the Restatement (Third) of Property: Donative Transfers provides that if a specifically devised property is not in the testator's estate at death, the legatee is entitled to the proceeds remaining unpaid at death of any sale of the property unless this would be inconsistent with the testator's intent. § 5.2. The approach of the Restatement is a reversal of the common law in favor of a minority of the developing case law:

"The common law developed two conflicting theories of ademption, the 'identity' theory and 'intent' theory. Under the 'identity' theory, which predominates in the case law, a specific devise completely fails – i.e., the devisee is entitled to nothing – if the specifically devised property is not in the testator's estate at death. Like any doctrine that treats the testator's intent as irrelevant, the identity theory sometimes operates to defeat intent, sometimes not, but then only by coincidence. Under the 'intent' theory, however, a testator's intent is central to the inquiry. Under that theory, the devise fails unless the evidence establishes that failure would be inconsistent with a testator's intent. [The Restatement (Third)] adopts the 'intent' theory of ademption."

Id. at cmt. b.

Maryland generally adopts the identity theory as illustrated by Seifert v. Kepner, 227 Md. 517 (1962). This case involved a specific bequest of stock in a company. Within one week of the testator’s death, the company executed a plan of liquidation and declared a liquidating distribution. At death, the decedent still had his shares of stock but also had the check for the liquidating distribution. The Court of Appeals held that the stock had not been adeemed:

"The ademption may result not only from a complete loss or destruction of the subject of the gift, but also from changes which 'involve a loss of its identity as specified.' Whether an ademption occurs depends rather upon the fact of change than a change of intention. But nevertheless Chief Judge Bond stated (p. 114) that: 'The question, then, is one of the testator's intention in the designation or description of the articles given', and cited Walton v. Walton, 7 Johns. Ch. 258, for the proposition that 'dividends to shareholders on liquidation of the Bank of the United States were held to pass under a legacy of shares in the bank’…

In the instant case the testator still owned the stock bequeathed at the time of his death, and the executors admit their obligation to sell and distribute the proceeds of it. The question concerns cash, liquidated and distributed to the testator by corporate action as a return of capital. In a broad sense this was merely a change in form, effecting the conversion which the will directed. To hold that this change, not due to the action of the testator, effected a reallocation of the testator's careful plan of distribution among the natural objects of his bounty, would seem to defeat his manifest intention. We think the liquidating dividend in the hands of the testator at the time of his death is fairly within the description of the word 'proceeds' in the language of the bequest, and that the distribution did not work an ademption."

Id. at 521. Under either the identity theory or the intent theory, the common law recognizes that a change in form alone cannot defeat a specific bequest. See Md. Code Ann., Est. & Trusts § 4-405; Buscher, Md. App. at 666-72.

In addition to the ademption by extinction, ademption may occur by satisfaction – when the testator, while alive, has given the beneficiary something of value in lien of the legacy.  In cases of ademption by satisfaction, intent is relevant to determine whether the inter vivos gift was meant to substitute for the testamentary bequest.  In Yivo Institute for Jewish Research v. Zaleski, 386 Md. 654 (2005), the Court permitted testimony of the decedent's comments made long after he made the gift inter vivos as evidence of such intent.

14.4 Survivorship And Anti-Lapse

The common law was grounded on the principal that property cannot be transferred to a deceased person:

"A will transfers property at the testator's death, not when the will was executed. The common-law rule of lapse is predicated on this principle and on the notion that property cannot be transferred to a deceased individual. Under the rule of lapse, all devises are automatically and by law conditioned on survivorship of the testator. A devise to a devisee who predeceases the testator fails (lapses); the devised property does not pass to the devisee's estate, to be distributed according to the devisee's will or pass by intestate succession from the devisee."

Unif. Probate Code § 2-603 cmt.

The Maryland statute reverses the rule at common law. Md. Code Ann., Est. & Trusts § 4-403. Apparently, this is different from most other state statutes which, rather than simply reversing the common law, re-direct the property to specific classes of substantive takers:

"Modern anti-lapse statutes do not reverse the lapse rule. To do so, they would have to provide that a devise to a devisee who fails to survive the testator passes to the deceased devisee's estate. Instead, they provide that the property that the devisee would have taken had he or she survived the testator passes to specified substitute takers, typically the descendants of the deceased devisee who survives the testator."

Restatement (Third) of Prop.: Donative Transfers  § 5.5 cmt. b.

The Maryland statute provides that "[u]nless a contrary intent is expressly indicated in the will" a legacy to a deceased taker will "have the same effect and operation in law to direct the distribution of the property directly from the estate of the person who owned the property to those persons who would have taken the property if the legatee had died, testate or intestate, owning the property." § 4-403. As with all anti-lapse statutes, the Maryland rule has no application where the legatee was dead at the time the will was made; it only applies if a legatee is living when the will is made but dies thereafter.  See Billingsley v. Tongue, 9 Md. 575 (1856).

There are numerous Maryland cases interpreting the anti-lapse statute. In Rowe v. Rowe, 124 Md. App. 89 (1998), a mother’s will provided for her property go to her two sons “equally, share and share alike.” Id. at 93. One of the sons had predeceased and had left his wife as sole residuary legatee. The trial court applied § 4-403 to direct one-half of the estate to the deceased son's widow. On appeal, the surviving brother argued that the share and share alike language indicated intent of a per capita distribution which is dependent on survivorship. The surviving brother argued that this language evidenced a contrary intent in the will. The Court of Special Appeals affirmed the lower court’s judgment and held that contrary intent must be clearly expressed, not inferred.

Segal v. Himelfarb, 136 Md. App. 539 (2001), involved the possible double application of the anti-lapse statute. A wife left her entire estate to her husband with no contingent beneficiaries named in the will; her husband left everything to go to the wife if she survived him. The wife outlived the husband but did not revised her will before death. The issue before the court was whether the trial court erred in applying the anti-lapse law in a manner that ultimately directed the estate back to the wife’s heirs. The Court of Special Appeals upheld a distribution to the wife's heirs. The court applied the anti-lapse statute to send the wife’s property to the deceased husband. As his will directed his property to his surviving wife, and as the wife out-lived her husband, the court found that the husband’s will effectively directed the property back to the wife and thus onto her heirs.

"Although we do not reach this decision easily, we agree with appellees' interpretation of the anti-lapse statute. The proper interpretation is that the anti-lapse statute is applicable at the time of the legatee's death, rather than at the time the asset actually comes into the legatee's estate. This is of primary significance in this case because the point in time when the statute is applicable determines to whom the disposition passes. At the time of Louis Segal's death, his wife was still alive and, therefore, if appellee's interpretation is correct, the estate passes back to her according to his will."

Id. at 541.

Considerable litigation in several jurisdictions has focused on whether a contrary intent was indicated in the will. Such disputes can be prevented through careful drafting:

"A foolproof means of expressing a contrary intention is to add to a devise the phrase 'and not to [the devisee's] descendants.' In the case of a power of appointment, the phrase 'and not to the appointee's descendants' can be added by the donor of the power in the document creating the power of appointment, if the donor does not want the anti-lapse statute to apply to an appointment under a power. In addition, adding to the residuary clause a phrase such as 'including all lapsed or failed devises,' adding to a non-residuary devisee a phrase such as 'if the devisee does not survive me, the devise is to be passed under the residuary clause,' or adding a separate clause providing that generally 'if the devisee of any non-residuary devise does not survive me, the devise is to pass under the residuary clause' makes the residuary clause and 'alternative devise'."

Uniform Prob. Code § 2-603(b)(3) cmt.

Much litigation had also addressed whether certain terms of survivorship (e.g., “to my son if he survives me”) automatically defeat the anti-lapse statute. Not surprisingly, language explicitly providing that the taker must survive is regularly found to constitute express indication of contrary intent. However, this is not always the case:

"An often litigated question is whether language requiring the devisee to survive the testator, without more, constitutes a sufficient expression of a contrary intent to defeat the anti-lapse statute. The majority view is that such language signifies a contrary intent. Because such a survival provision is often boiler-plate form-book language, the testator may not understand that such language could disinherit the line of descent headed by the deceased devisee. When the testator is older than the devisee and hence does not expect the devisee to die first, or if the devisee was childless when the will was executed, it seems especially unlikely that a provision requiring the devisee to survive the testator was intended to disinherit the devisee's descendants."

Restatement (Third) of Prop.: Donative Transfers  § 5.5 cmt. h.

The Uniform Probate Code § 2-603b(3) states that terms of survivorship (e.g., "if he survives me" or “my surviving children") are not sufficient indication of intent contrary to the application of the anti-lapse statute in the absence of additional evidence of contrary intent, The rationale for this approach parallels that of the Restatement cited above. Conversely, Maryland case law has found that survivorship language constitutes express indication of contrary intent.

Like the majority of statutes governing wills in the Maryland Code, Estates and Trusts Article, the anti-lapse statute does not apply to trusts. See Md. Code Ann., Est. & Trusts § 14-102.

14.5 Simultaneous Death

Maryland law provides rules for simultaneous death in the event that a testamentary document does not provide for such an eventuality. See Md. Code Ann., Cts & Jud. Proc. §§ 10-801 – 10-807. Clear and unambiguous language which overrides application of these default rules in a will prevents application of the default provisions. Pannone v. McLaughlin, 37 Md. App. 395 (1977). Such a clause in the will, however, will not govern insurance policy but – as with most of the will provisions – do not cover non-probate transactions. Sherman v. Sherman, 804 F. Supp. 729 (D. Md. 1992) (Insurance proceeds).