Legal Definitions - failed gift

A failed gift, in the context of a will or estate planning, refers to a specific asset (like a piece of property, a sum of money, or a particular item) that a deceased person intended to give to a specific individual or entity, but which cannot be successfully transferred to that intended recipient for various legal reasons.

This situation commonly arises when:

• The intended recipient (beneficiary) dies before the person who made the will (the testator).
• The specific asset mentioned in the will no longer exists or is no longer owned by the testator at the time of their death.
• The intended recipient formally refuses to accept the gift.

When a gift fails, it typically means the asset will not go to the originally named beneficiary. Instead, it might become part of the deceased person's remaining assets (known as the "residuary estate"), be distributed to an alternate beneficiary named in the will, or be distributed according to the laws of intestacy (if the will doesn't provide an alternative).

Here are some examples to illustrate a failed gift:

• Example 1: Beneficiary Predeceases the Testator

  Imagine a will where Mr. Davies leaves his beloved vintage watch collection to his grandson, Liam. Tragically, Liam passes away in an accident six months before Mr. Davies dies. Because Liam is no longer alive to receive the watches, the gift of the watch collection to him is considered a failed gift. The watches would then be distributed according to other provisions in Mr. Davies's will, or become part of his general estate to be divided among other heirs.

• Example 2: Specific Asset No Longer Exists

  Ms. Rodriguez's will states that her vacation condominium in Florida should be given to her best friend, Elena. However, five years before her death, Ms. Rodriguez sells the condominium and uses the proceeds to invest in stocks. When Ms. Rodriguez dies, the specific condominium mentioned in the will no longer exists as part of her estate. Therefore, the gift of the condominium to Elena is a failed gift, and Elena would not receive the stock investments in its place unless the will explicitly stated that.

• Example 3: Beneficiary Refuses the Gift

  In his will, Mr. Chen bequeaths his extensive collection of antique weaponry to his nephew, David. After Mr. Chen's death, David, who is a pacifist and has no interest in weapons, formally informs the estate executor that he does not wish to accept the collection. Even though the gift exists and David is alive, his refusal means the gift cannot be successfully transferred to him. This constitutes a failed gift, and the antique weaponry would then be handled as part of Mr. Chen's residuary estate or distributed according to other instructions in the will.