When an individual purchases a life insurance policy or prepares a Last Will and Testament, they typically must designate beneficiaries. In preparing their estate planning documents, most people assume when making these decisions that the beneficiaries they name will outlive them. However, this is not always the case. Therefore, you might wonder: What happens if my beneficiary dies before me? The answer is: “It depends.” A knowledgeable estate planning lawyer with Roulet Law Firm, P.A. may be able to explain what happens in this situation and how you can put alternate arrangements in place through estate planning. Consider contacting us to schedule a confidential consultation today by calling our Minnesota office at (763) 420-5087 or our Florida office at (941) 909-4644 or fill out the contact form on this page and a member of our team will reach out to you.
What Is a Beneficiary?
A beneficiary is someone you name to receive your property after you die. This may often be another person, a trust, a charity, or an organization. An individual preparing an estate plan may name a beneficiary in many legal documents, including:
- Deeds
- Wills
- Trusts
- IRAs, 401(k)s, and other retirement plans
- Titles
- Bank accounts
- Life insurance proceeds
Beneficiaries are a critical component of estate planning. After all, they are who will inherit the property you leave in your estate plan.
Types of Beneficiaries
Before answering the question, What happens if my beneficiary dies before me? individuals typically need to first understand the different types of beneficiaries who may be involved in their estate plans. One of these other beneficiaries may be next in line to inherit the property designated to the deceased beneficiary:
- Primary beneficiary – The primary beneficiary is the person or organization who stands to inherit first. Individuals can name one or more beneficiaries in their wills, and many life insurance policies allow for similarly customizable distribution of assets. Some people choose to let assets be divided equally between multiple beneficiaries. Shares of unequal value are also very common, however, as when a testator names their spouse to inherit 70% of their estate and divides the remaining 30% between their two children, who receive 15% each. All three become primary beneficiaries.
- Contingent beneficiary – The contingent beneficiary stands to inherit if the primary beneficiary cannot inherit or refuses the inheritance. In many situations, if a primary beneficiary predeceases the individual who has taken out a life insurance policy or drafted a will, the contingent beneficiary inherits the share that a primary beneficiary would have received, had they been living or willing to accept the inheritance. A contingent beneficiary thus functions in these cases essentially as a backup plan.
- Class of beneficiaries – Sometimes people want a pool of people or entities to inherit some or all of their assets. This situation obtains, for instance, when an individual designates that property should go to their children or grandchildren. If one of the beneficiaries in this group predeceases the testator or policy holder, the inheritance may be split among the surviving beneficiaries.
- Per stirpes – Per stirpes means that an inheritance goes to a group of beneficiaries by the branch of their family tree. This often translates to a person’s children receiving an inheritance left to one of their parents. If a person with three children leaves their entire estate to their children per stirpes, but one of these children predeceases the testator, the deceased child’s share would pass to their own children, while the individual share of each of the testator’s remaining children would not be affected.
Effect of Simultaneous Deaths
In some unfortunate instances, a testator and one or more of their beneficiaries may die at or near the same time. For example, a husband and wife may be both killed in a car accident. The spouses may die at the same time or within a few hours of each other.
In these sad situations, the distribution of assets in the probate estate is generally determined by state law. In Minnesota, according to the Office of the Revisor of the Statutes, any beneficiary who survives the decedent by a period of fewer than 120 hours is assumed for the purposes of exempt property, homestead considerations, and intestate succession, as long as any heir remains who may inherit the estate under Minnesota’s laws of intestate succession. In Florida, on the other hand, Florida Probate Code § 732.601 specifies distinct provisions and assumptions for simultaneity vs. priority of death dependent on the type of asset the deceased beneficiary was to have inherited.
Updating Your Estate Plan
If you have recently learned that a beneficiary has passed away, you may wish to update your estate plan to reallocate your property. If you are a resident of Minnesota or Florida, an experienced estate planning lawyer from Roulet Law Firm, P.A. may be able to review the existing provisions in your estate plan and advise you whether your estate planning documents may need to be updated, as well as whether you might want to name additional contingent beneficiaries.
Updating for Flexibility
An estate planning lawyer may also be able to suggest specific language to reduce the frequency with which individuals may need future updates of this nature. A common example is the inclusion of a clause stating that the inheritance of a deceased beneficiary lapses, so that any inheritance previously designated for that individual can be automatically redistributed among remaining primary beneficiaries.
If a testator with three children specifies that their children should receive equal shares of their probate estate but one of the children predeceases the testator, a clause specifying lapsed inheritance may ensure that the surviving two children receive equal shares. Alternatively, an individual or their estate planning lawyer could draft a clause stating that shares should go to beneficiaries per stirpes, so that the testator’s children’s own children inherit their parents’ share.
Contact an Experienced Estate Planning Lawyer for Help
If you have questions like What happens if my beneficiary dies before me? consider contacting an experienced estate planning lawyer. A caring and dedicated estate planning attorney who understands your concerns may be able to review your estate plan, explain your options, and prepare beneficiary designations to help you ensure that your wishes will be understood and fulfilled. Contact Roulet Law Firm, P.A. by calling our Minnetonka, Minnesota office at (763) 420-5087 or our Sarasota, Florida office at (941) 909-464 today.
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