Which of the following describes the abatement order when assets are insufficient to pay all debts and dispositions?

• A. Distributive shares in property not disposed of by will, residuary dispositions, general dispositions, demonstrative dispositions, specific dispositions (ratably), and spousal dispositions eligible for the estate tax marital deduction.
• B. Debts have priority over all dispositions.
• C. Specific dispositions are paid first.
• D. Spousal disposals always receive priority.

Answer: (A)

Abatement when assets are not enough to pay all debts and dispositions follows a fixed statutory order in New York. The idea is to reduce gifts and bequests in a sequence that prioritizes the portions of the estate that are not tied to a specific will provision and those that are less certain to leave to particular beneficiaries. First, the distributive shares in property not disposed of by will (the intestate portion) are abated. Next come the residuary dispositions, then general dispositions, then demonstrative dispositions, and after that, the specific dispositions are abated pro rata. Finally, any spousal dispositions that qualify for the estate tax marital deduction are abated last. This sequencing preserves as much of the non-testamentary and flexible gifts as possible while still ensuring debts and taxes are paid.