A beneficiary is a person named in an estate plan who is designated to receive some kind of inheritance pursuant to the terms of the plan upon the passing of the creator of the plan. Beneficiaries not only play a critical role in an estate plan, but are often a central reason for the plan being created in the first place. Many people begin the estate planning process in order to help ensure that loved ones are set to inherit certain assets. During the estate planning process, those who designate individuals as beneficiaries usually do so under the assumption that primary beneficiaries will survive them. What, however, happens if primary beneficiaries pass away prior to a person who has named them as a beneficiary under an estate plan?
Who Inherits if a Primary Beneficiary Dies?
A strong, comprehensive estate plan will often name more than one type of beneficiary. Primary beneficiaries will be named as well as contingent beneficiaries. A primary beneficiary is a designated individual, or organization, who is set to inherit first from an estate planning tool such as a will or a trust. A contingent beneficiary, on the other hand, will only inherit should the primary beneficiary predecease the creator of the estate plan. This is why it can be so important to name contingent beneficiaries in your estate plan. Should you be predeceased by a primary beneficiary, you will be able to name someone else who you would want to inherit that part of your estate.
While naming primary and contingent beneficiaries can be important in your estate plan, it is also important to make a point to review and update your estate plan in the event that a beneficiary predeceases you. This will give you an opportunity to make such updates as moving contingent beneficiaries up to a primary beneficiary position and naming new contingent beneficiaries. Naming contingent beneficiaries and keeping your estate plan as up to date as possible can help safeguard your wishes.
Additionally, when developing and updating your estate plan, it can be important to consider the paths an inheritance can take in light of a predeceased beneficiary. An estate plan, for instance, can say that a beneficiary’s inheritance “lapses” should the beneficiary predecease the creator of the estate plan. When an inheritance lapses, it means that the inheritance is no longer in effect and will go to another named beneficiary. Alternatively, you can provide that an inheritance passes “per stirpes” should a beneficiary predecease you, the creator of the estate plan. Per stirpes is a Latin phrase meaning “by branch.” When a beneficiary predeceases the estate plan creator and the estate plan designates the predeceased beneficiary’s inheritance to pass “per stirpes,” it means that the beneficiary’s inheritance will automatically pass in equal portions to their descendants. “Descendants” refers to children of the beneficiary. Should the beneficiary pass away without any descendants, the per stirpes language is ineffectual and the inheritance passes as though it has lapsed.
Estate Planning Attorney
For a strong estate plan that protects your wishes through the unpredictable ups and downs of life, the trusted estate planning team at Monk Law is here for you and your loved ones. Contact Monk Law today.