What is Ademption?

Legal Definition
Ademption, or ademption by extinction, is a common law doctrine used in the law of wills to determine what happens when property bequeathed under a will is no longer in the testator's estate at the time of the testator's death. For a devise (bequest) of a specific item of property (a specific gift), such property is considered adeemed, and the gift fails. For example, if a will bequeathed the testator's car to a specific beneficiary, but the testator owned no car at the time of his or her death, the gift would be adeemed and the aforementioned beneficiary would receive no gift at all.

General bequests or general gifts - gifts of cash amounts - are never adeemed. If the cash in the testator's estate is not sufficient to satisfy the gift, then other assets in the residuary estate will need to be sold to raise the necessary cash.

Some property lies in a "gray" area, in which the testator's specific intent must be determined. For example, where the testator bequeathes "500 shares of stock" in a company, this may be read as a general bequest (that the estate should purchase and convey the particular stocks to the beneficiary), or it may be read as a specific bequest, particularly if the testator used a possessive ("my 500 shares"). Such a gift is deemed to be a demonstrative gift. Such demonstrative gifts are deemed to be a hybrid of both specific and general gifts. If one were to bequeath "500 shares of stock," most states would deem that to be a demonstrative gift. The resultant gift to the heir receiving "500 shares," would be the date of death value of 500 shares of that particular stock.

Ademption may be waived if the property leaves the estate after the testator has been declared incompetent. Furthermore, in some cases the beneficiary will be entitled to the proceeds from the sale of property, or to the insurance payout for property that is lost or destroyed.

To avoid confusion as to what may or may not be adeemed, sometimes the phrase "if owned by me at my death" is placed into the articles of a will in which property is being bequeathed.

As for the sale of land under an executory contract, traditional case law agrees that ademption occurs upon the death of the testator and that the proceeds of sale, when the closing occurs, should not pass to the specific devisee of the property. However, the more modern view and the Uniform Probate Code, which has been adopted by some states, disagrees. These jurisdictions find that when property subject to specific devise is placed under contract of sale before the decedent's death, the proceeds of the sale will pass to the specific devisee.
-- Wikipedia
Legal Definition
The failure of a bequest from a will because the property is no longer in the estate. For example, if the decedent leaves "My car to my niece", but owns no car at the time of death.

What the beneficiary actually receives in these situations depends on the testator's(person who wrote the will) intent, the gift that failed, and state law.

See Ademption
Legal Definition
Wills. A taking away or revocation of a legacy, by the testator.

2. It is either express or implied. It is the former when revoked in express terms by a codicil or later will; it is implied when by the acts of the testator it is manifestly his intention to revoke it; for example, when a specific legacy of, a chattel is made, and afterwards the testator sells it; or if a father makes provision for a child by his will and afterwards gives to such child, if a daughter, a portion in marriage; or, if a son, a sum of money to establish him in life, provided such portion or sum of money be equal to or greater than the legacy. 2 Fonbl. 368 et, seq. Toll. Ex. 320; 1 Vern. R. by Raithby, 85 n. and the cases there cited. 1 Roper, Leg. 237, 256, for, the distinction between specific and general legacies.
-- Bouviers Law Dictionary
Legal Definition
The revocation, recalling or cancellation of a legacy, according to the apparent intention of the testator, implied by the law from acts done by him in his life, though such acts do not amount to an express revocation of it. Kenaday v. Sinnott, 179 U. S. 606, 21 Sup. Ct. 233, 45 L. Ed. 339; Burnham v. Comfort, 108 N. Y. 535, 15 N. E. 710, 2 Am. St. Rep. 462; Tanton v. Keller, 167 III. 129, 47 N. E. 376; Cowles v. Cowles, 56 Conn. 240, 13 Atl. 414.

"The word 'ademption' is the most significant, because, being a term of art, and never used for any other purpose, it does not suggest any idea foreign to that intended to be conveyed. It is used to describe the act by which the testator pays to his legatee in his life-time, a general legacy which by his will he had proposed to give him at his death. (1 Rop. Leg. p. 365.) It is also used to denote the act by which a specific legacy has become inoperative on account of the testator having parted with the subject." Langdon v. Astor, 16 N. Y. 40. Ademption, in strictness, is predicable only of specific, and satisfaction of general legacies. Beck v. McClillis, 9 Barb. (N. Y.) 35, 56; Langdon v. Astor, 3 Duer (N. Y.) 477, 541. adjunctio, (q. v.) Called also ferruminatio. Mackeld. Rom. Law, ยง 276; Dig. 6, 1, 23, 5.
-- Black's Law Dictionary
Legal Definition
The avoidance of a legacy by an act of the testator. See 95 Am. St. Rep. 343.
-- Ballentine's Law Dictionary