When a person engages in estate planning, they typically identify which
people they want to receive their property through their will. However,
on occasion a beneficiary named in a will dies before the creator of the
will. What happens to the property if the beneficiary is deceased?
What happens next depends on how the will was drafted and the state probate code.
If the creator had a well-drafted will, the will addresses what is to happen
to certain property in the estate if a beneficiary dies before the will’s
creator. This is normally addressed by naming an alternative beneficiary
in the will.
For example, a man wants to leave his house to his wife, but he realizes
that she may die before he does. If that were to happen, he would want
his house to go to their daughter. To address that issue, he could include
a provision that says that if his wife predeceases him, their daughter
would get the house.
When the Will Does Not Provide an Alternative Beneficiary
What if the will does not provide an alternative beneficiary? In the absence
of an alternative beneficiary, the state laws determine who gets the property
that the deceased beneficiary would have received if they were still alive.
In some states, when a beneficiary dies and there is no alternative heir
named, the gift “lapses.” Meaning, the property that would
have gone to the deceased beneficiary would be included with all other
assets that the will did not transfer to other beneficiaries. Such assets
are known as the “residuary of the estate.”
In the typical scenario, the will identifies one more beneficiaries who
are to receive the residuary estate.
Some states have “anti-lapse” statutes, which allow descendants
of the predeceased beneficiary to receive the property that would have
gone to the heir if he or she hadn’t passed.
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