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.
