Gifts, Insufficient Assets
When a testator's estate does not have sufficient assets to make all of the testamentary gifts, only certain gifts will be paid. The reduction of gifts due to insufficient assets is known as abatement.

Each testamentary gift is paid according to a specific statutory hierarchy, based upon the type of gift and the beneficiary's relationship to the testator:

1. Specific gifts to the surviving spouse.
2. Specific gifts to the decedent's issue.
3. Specific gifts to other beneficiaries.
4. General gifts of cash, stocks, or bonds.
5. General gifts which are not part of the residuary estate.
6. Residuary gifts.

Beginning with the first category, each gift is paid in full, provided that every other gift within the same category can also be paid in full. After all gifts within a single category are paid, the remaining estate assets are applied to the next category.

When a category is reached in which every gift cannot be fully paid, each gift within that category abates in proportion to the fraction of the decedent's estate each beneficiary would have received if the gift had been paid in full.

For Example:
After full payment to the surviving spouse, an estate does not have sufficient assets to pay any remaining testamentary gifts in full.

The will makes two specific gifts of $5,000 to two of the testator's children. (Class number two above.) The total value of the specific gifts in this class is $10,000. Each class member was named to receive 50 percent of the total amount of the gifts to that class, so each class member receives 50 percent of the available assets.  For instance, if only $2,000 remains each child will receive 50% of the available amount or $1,000.

See: Gifts, General Distribution; Property Controlled By Wills; Property Not Controlled By Wills