Ademption of Gifts / Powers of Attorney

Specific gifts of property in Wills sometimes fail, as the asset that was to be gifted was sold or disposed of by the Willmaker during their lifetime. This is known legally as "ademption."

There is an exception to the law of ademption, which exists within NSW's Powers of Attorney legislation.

If an attorney sells the asset using the Power of Attorney, then Section 22 of the Act "saves" the gift from failing. This is achieved by transforming the asset the subject of the specific gift into whatever form it has now taken. 

A simple example is where an attorney sells the Willmaker's home to pay for a nursing home bond. Instead of the gift of the house failing, the beneficiary instead receives the bond from the Will (up to the value of the house).

If the Willmaker sells the property themselves, then the gift still fails. 

Section 23 of the Powers of Attorney Act still requires an application to the court to confirm the gift. 

Importantly, the above provisions only appear to Powers of Attorney created under this 2003 legislation - it does not apply the older Powers of Attorney under previous legislation - something to keep in mind when reviewing documents that have not been updated in some time. 

Contact the MSL team if you have any questions!