A detailed and thorough estate plan is essential in protecting your loved ones and ensuring their peace of mind after your passing. Estate plans, among other advantages, can provide your loved ones with financial assets, which can help them navigate life after you are no longer around.
When you create an estate plan, the assumption is that the people you appoint as beneficiaries will outlive you. Unfortunately, tragic unforeseen events can happen, and your beneficiaries may not survive you. When it comes to considering what will happen in this situation, one of the most common questions that people ask is who will inherit the asset if the beneficiary is no longer alive.
The Role of Beneficiary
The term ‘ beneficiary’ refers to anyone whom the creator of an estate plan has appointed in their estate plan who will receive an inheritance from the creator following the creator’s death. Beneficiaries play a critical role in estate plans and many types of estate plans are not considered valid unless a beneficiary is appointed. While some people think beneficiaries are only people, they can also include organizations and other entities.
Not all beneficiaries are the same. Primary beneficiaries refer to individuals who have the first claim to inherit assets following a person’s death, while contingent beneficiaries only inherit assets if the primary beneficiary has predeceased the estate’s creator or the estate’s creator cannot be located. Some people think of primary beneficiaries as “first in line” and contingent beneficiaries as “second in line.”
What Happens When a Beneficiary Dies Before the Creator
In situations in which a beneficiary of either a trust or will passes away before the person who created the trust or will, the creator often must go back and revise the document.
Some people think if the beneficiary passes away before the creator that the whole estate planning document will be rendered invalid, but this is not the case. Even though it is not possible to plan for a beneficiary’s death, most thorough estate plans consider the possibility that this event will occur and name an alternate beneficiary. If an alternate beneficiary is named and the estate planning document does not address any alternates, the estate plan will remain in effect. Instead, the only difference in the execution of the estate plan will be that the beneficiary does not collect these assets. This might end up meaning that the assets are ultimately distributed in accordance with intestacy law.
Estate plans that address the potential death of the beneficiary might deal with the potential situation by stating that assets pass “ per stirpes,” which in Latin means “by branch” of a family tree. This means that if the beneficiary passes away before the creator of the trust or will, the assets will pass to the deceased beneficiary’s descendants or their child or children.
Contact a Seasoned Estate Planning Attorney
While it can be uncomfortable to consider your incapacity or death, estate planning is critical for a variety of reasons. If you need help creating an estate plan, one of the best things that you can do is obtain the assistance of an experienced estate planning lawyer. Contact attorney Jim A Lyon today to schedule a free case evaluation.