When a beneficiary under a will receives their inheritance prior to the testator's death, the question then becomes whether or not the devise is satisfied. This is known as ademption by satisfaction.
For reference, ademption is defined as property that was listed in the person's will that is not in his or her estate at the time of their death. Black's Law Dictionary 8th ed. (West Group, 2004). Of note, when I was in law school, the term used for ademption by satisfaction was "advancement." Other jurisdictions may use the latter term instead of the former.
California Probate Code § 21135 states that if one of the following conditions occurs, then ademption by satisfaction is triggered:
(a) Property given by a transferor during his or her lifetime to a person is treated as a satisfaction of an at-death transfer to that person in whole or in part only if one of the following conditions is satisfied:
(1) The instrument provides for deduction of the lifetime gift from the at-death transfer.
(2) The transferor declares in a contemporaneous writing that the gift is in satisfaction of the at-death transfer or that its value is to be deducted from the value of the at-death transfer.
(3) The transferee acknowledges in writing that the gift is in satisfaction of the at-death transfer or that its value is to be deducted from the value of the at-death transfer.
(4) The property given is the same property that is the subject of a specific gift to that person.
For example, Thomas Hobbs, a widower without any children, wrote a will that included a gift of $25,000 to his neighbor Bobby Winghart. The balance of his estate went to his friend, a famous author, Samuel Langhorne Clemens. Thomas named his uncle Elvis Hobbs as executor.
Thomas was a wealthy man and had amassed a large fortune at the time of his death. He owned multiple properties having been a successful entrepreneur in Silicon Valley. Yet when Thomas died, his estate was illiquid, i.e. it lacked cash resources. Thomas had tirelessly sought investments and believed that a bank account was a poor asset-maximization vehicle. Thus, his estate did not have sufficient funds to initially provide for Bobby's gift.
One day, following Thomas' death, Elvis began sorting through Thomas' possessions. When going through Thomas' desk, he discovered that Thomas had given Bobby a gift of $25,000 the year before he died. The check read on the memo line "$25k is worth more today $25k tomorrow, enjoy!" Armed with this information, Elvis believed Bobby's gift had already been satisfied.
Elvis then filed a petition in probate court to determine entitlement to Thomas' estate, arguing that Bobby's gift had adeemed. Elvis argued that since Thomas' gift of $25k to Bobby matched the amount stated in the will and the check referenced the will, ademption by satisfaction should occur. The probate court agreed and ordered that Bobby take nothing from Thomas' estate as he had already received his inheritance.