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.
