Lapse, Anti-Lapse, Class Gifts, Ademption, Abatement, and Exoneration

A testamentary gift lapses when the named beneficiary fails to survive the testator. At common law a lapsed gift fell out of the will: a specific or general lapsed gift dropped into the residue, and a lapsed residuary gift passed by intestacy under the harsh 'no-residue-of-a-residue' rule. California, like every state, modifies this regime with an anti-lapse statute, but the California version has a distinctive scope that the examiners test relentlessly.

Probate Code §21110 provides that if a transferee — including a transferee under a will, a trust, or another instrument — fails to survive the transferor, the issue of the deceased transferee take in the transferee's place by representation, BUT only if the deceased transferee was kindred of the transferor or kindred of a surviving, deceased, or former spouse of the transferor.

The kindred limitation is the heart of the rule: anti-lapse rescues a gift to a predeceased relative (a child, sibling, niece, cousin) by passing it to that relative's descendants, but it does NOT save a gift to a predeceased friend, business partner, charity, or other non-relative — that gift simply lapses. Thus 'to my friend John,' where John predeceases leaving children, lapses and John's children take nothing under §21110, whereas 'to my brother Bill,' where Bill predeceases leaving children, is saved and Bill's children take by representation.

Anti-lapse is a default rule that yields to the testator's contrary intent; the most important California feature is that under §21110(b) the statute applies 'unless the instrument expresses a contrary intention or a substitute disposition,' and a requirement that the transferee survive the transferor — an express survivorship condition — constitutes such a contrary intention only if expressly stated. A bare gift 'to my son Tom' is therefore saved by anti-lapse if Tom predeceases leaving issue, but 'to my son Tom, if he survives me' expresses survivorship and defeats anti-lapse, sending the gift elsewhere.

A class gift is a gift to a group described collectively — 'to my children,' 'to my nieces and nephews,' 'to the surviving partners of the firm' — rather than to named individuals, where the testator intends the membership and shares to be determined at distribution. The defining feature of a class gift is the right of survivorship among class members: if one member predeceases the testator, the surviving members ordinarily divide the entire gift, and the deceased member's share does not lapse out of the class.

California, however, applies the anti-lapse statute to class gifts: §21110 substitutes the deceased class member's issue for the member when that member was the transferor's kindred. So a gift 'to my children,' where one child predeceases leaving grandchildren, does not simply accrue to the surviving children — the predeceased child's issue take that child's share by representation, because children are kindred. The interaction between anti-lapse and class survivorship is a favorite exam wrinkle: anti-lapse beats the default class-survivorship rule whenever the predeceased member is a relative with surviving issue.

When a beneficiary is dead at the time the will is executed (rather than later), the gift is void rather than lapsed, but anti-lapse applies to void gifts as well, so a relative's issue can still take. The old 'no-residue-of-a-residue' rule is reversed in California by §21111: if a residuary gift fails (and anti-lapse does not save it), the failed residuary share passes to the OTHER residuary beneficiaries in proportion to their interests, rather than dropping to intestacy — but only where there are other residuary takers and the residue was given to two or more persons.

If anti-lapse applies, it takes priority and the deceased residuary taker's issue are substituted before the surviving-residuary rule operates.

Ademption by extinction applies only to specific gifts — gifts of a particular, identified asset such as 'my 2019 Tesla,' 'my house at 14 Oak Street,' or 'my 500 shares of Acme stock.' If the specifically devised property is not part of the testator's estate at death — because it was sold, lost, destroyed, or given away — the gift is adeemed and the beneficiary takes nothing; the beneficiary cannot demand cash equivalents or substitute property under the classic identity theory. California has substantially softened pure ademption through statutory exceptions in §§21133-21135.

Under §21133, a specific devisee has a right to any of the following that remain a part of the estate: a balance of the purchase price owed by a purchaser at the testator's death; any condemnation award for the taking of the property unpaid at death; any insurance proceeds unpaid at death for casualty to the property; and property acquired as a result of foreclosure of a security interest on the specifically devised property.

Section 21134 protects against ademption where a conservator or an agent under a durable power of attorney sells the specifically devised property or where eminent-domain or insurance proceeds are received during incapacity — the devisee takes a general pecuniary gift equal to the net sale price or proceeds, on the theory that the testator did not personally choose to dispose of the asset. Section 21135 governs satisfaction and treats certain lifetime transfers as advancements against devises only where a writing so provides.

Section 21132 addresses changes in securities: a specific gift of stock carries with it additional securities of the same entity acquired by reason of stock splits, stock dividends, mergers, or reorganizations, so a gift of '100 shares' becomes 200 after a two-for-one split. These exceptions narrow ademption to cases where the testator voluntarily and knowingly disposed of the very asset.

Abatement determines whose gifts are reduced when the estate's assets are insufficient to pay all debts, expenses, and legacies. California fixes the order of abatement in §21402: property is applied to debts and expenses in the following sequence — (1) property not disposed of by the instrument (i.e., property passing by intestacy) abates first; (2) residuary gifts abate next; (3) general gifts to persons other than the testator's relatives; (4) general gifts to the testator's relatives; and (5) specific gifts abate last, with specific gifts to relatives preferred over specific gifts to non-relatives within that tier.

Within each class, gifts abate pro rata. The structure protects the testator's most particularized intentions — specific devises of identified property and gifts to family — by sacrificing the least-specific dispositions first. A common exam scenario presents an estate with insufficient cash to pay a large debt and asks which beneficiary loses; the answer is to march down the §21402 ladder, exhausting intestate and residuary property before touching general and then specific gifts. Exoneration is a separate doctrine governing encumbered property.

At common law a specific devisee of real property subject to a mortgage could demand that the mortgage be paid off from the residuary estate, taking the property free and clear ('exoneration of liens'). California rejects this presumption: under §21131, a specific gift of encumbered property passes subject to the encumbrance unless the will expressly directs that the lien be paid from other estate assets. A general direction to pay 'debts' is NOT a sufficient expression of intent to exonerate.

Therefore a devisee of 'my house at 14 Oak Street,' which carries a mortgage, takes the house but remains responsible for the mortgage; the residuary estate does not pay it off absent an explicit exoneration clause. This default reflects the modern assumption that testators expect beneficiaries to take property with its attached debt.

Abatement Order Under §21402