What to do if a Beneficiary Dies?

When creating an estate plan with a final will and testament or living trust, one of the primary purposes is to name a beneficiary to your estate. What happens if the named beneficiary passes away before the testator of the estate plan? This is one of the most significant problems that can occur in the estate planning process, so it is important to understand your legal options and what can occur if this circumstance arises in your estate planning. The Inheritance Recovery Attorneys in California have helped many clients in this exact situation with the legal issues that can arise when a beneficiary predeceases the person naming them as beneficiary to their estate. To learn more about this and other issues in estate planning, call or contact our office today for a free consultation of your case.

When a Beneficiary Dies Before the Testator

In a typical estate plan, the testator will create a will, living trust, and other planning documents that dictate the distribution of the estate after the testator’s death. This includes naming beneficiaries to various aspects of the estate, which dictates inheritance rights. However, when the beneficiary named in the estate passes away before the testator, what happens next often depends on the individual state laws. Typically, the property bequeathed to the beneficiary will either lapse, follow a per stirpes provision, be distributed through intestacy laws, or follow the rules of an anti-lapse law.

If the gift lapses it typically folds into the residual estate of the testator, or the part of the estate that has not been specifically given to an heir or beneficiary. The per stirpes provision means that the subsequent generations of the beneficiary would inherit the property according to a set of complex rules, and intestacy laws are those that apply when a person does not have a will or valid estate plan. The property of the estate is then distributed to the testator’s heirs according to the state’s intestacy laws.

California Anti-Lapse Law

In California, the state has an anti-lapse law that prevents many beneficiary gifts from lapsing in the estate. Under the law, if certain requirements are met the gifts designated for the beneficiary in the testator’s estate will pass to the beneficiary’s issue, heirs, or designees instead of being folded into the residuary of the testator’s estate. The law first requires that the beneficiary be related to either the testator or the testator’s spouse. Therefore, a friend named as beneficiary does not apply under the California statute.

The second requirement is that the estate plan can provide otherwise for the property bequeathed to a beneficiary. For example, the testator could include a right of survivorship so that if the beneficiary does pass before the testator the beneficiary’s heirs would not inherit, or it could require that the beneficiary live for a certain period of time beyond that of the testator in order to inherit.

Options to Avoid Issues

Thankfully, a testator has options to try and avoid the issues that can arise when a beneficiary predeceases the writer of the estate plan. The first option is to name a contingent beneficiary to all accounts, wills, and trusts. The contingent beneficiary automatically inherits if the primary beneficiary dies before the testator. Oftentimes, the contingent beneficiary is someone from the next generation, increasing the chances that the contingent beneficiary will still be alive when the testator passes. Another option under the California anti-lapse law is to name additional conditions to a beneficiary’s inheritance. For example, stating that the beneficiary will inherit if they survive the testator, otherwise the inheritance goes to another person.

When a Beneficiary Dies Before the Estate is Distributed

Another situation may arise when the beneficiary passes away after the testator but before the estate is distributed. This circumstance is typically easier to deal with. At the death of the testator, the beneficiary automatically owns the property bequeathed to them even if it has not been distributed yet. Therefore, if the beneficiary dies before receiving that property, then the property becomes a part of the beneficiary’s estate and passes according to his or her own estate plan or intestacy laws.

Talk to Our Office Now

When a beneficiary predeceases the testator or the distribution of an estate, it can complicate the process significantly. However, at the Inheritance Recovery Attorneys, our office of experienced estate planning and probate attorneys is here to zealously advocate for your rights when these issues are involved. Call the office or contact us today to schedule a free consultation of your case.