When a will is read, the hope is that the estate matches what is listed in the will and that the executor can therefore carry everything out as specified in that will. The unfortunate reality, though, is that this does not always happen. In some cases, the will gives out more assets than the estate actually has.
For instance, maybe the will has two main beneficiaries. The first gets $250,000 and the second gets $100,000. However, the estate only has $300,000, leaving it $50,000 short. Abatement is the process of reducing some of the amounts left to the beneficiaries in order to make distribution possible.
Why does this happen? A few potential reasons include:
- The amount of assets that the person controlled decreased after they wrote the will and before they passed away.
- The person who wrote the will overestimated their wealth to begin with.
- Much of the assets were lost to various expenses, such as taxes, so there were not enough left for the gifts.
- The person doing the estate planning should have updated that plan more frequently than they did.
Perhaps the person wrote a will and then moved into a nursing home. It cost them $50,000 for one year of care, as their health failed, and then they passed away. They never updated the will and so it did not account for the reduction in assets.
Cases like this sometimes grow contentious as the court decides how much each person gets and whose bequests get reduced first. Make sure you know all of the rights that you have.