When you create an estate plan, you are making some of the most important decisions for your family’s future. You are choosing who will receive your assets, who will be in charge of carrying out your wishes, and how everything should be handled when you are no longer here.
Most people name children, spouses, or other close family members and friends as beneficiaries in their will or trust. But here’s a question many people do not think about: What happens if one of your beneficiaries passes away before you do?
It may feel uncomfortable to consider, but planning for this possibility is an important part of making sure your estate plan works exactly the way you want it to. Here are some of the most common outcomes.
- Your estate plan may name alternate beneficiaries.
The simplest solution is to name backup beneficiaries—sometimes called “contingent” beneficiaries. These are the people who would inherit if your primary beneficiary is not alive at the time of your passing.
For example, you might say that your John Doe is to receive your home. But if John Doe has already passed away, then his share would go to Jane Doe instead. This makes sure your wishes are clear.
- Your gift may “lapse.”
If you did not name an alternate beneficiary, the gift may simply disappear—or “lapse.” When that happens, the asset does not automatically go to the family of your original beneficiary. Instead, it may be redistributed according to the remaining terms of your will or trust.
For instance, if you left money to a sibling who passed away before you and you did not name an alternate, that gift might fall back into your general estate and be divided among your other beneficiaries.
- Per Stirpes or Per Capita?
There may be language in your will that says “per stirpes” or “per capita.” What does that mean? Let’s make it simple:
Per stirpes: if the named beneficiary passes away before you, their share will go to their heirs (their children).
Per capita: if the named beneficiary passes away before you, their share will go to the other named surviving beneficiaries (they will share the deceased beneficiary’s portion), and it would not go to that deceased beneficiary’s children.
- You stay in control with careful planning.
The best news is that you can take control of these “what if” situations. By naming alternate beneficiaries and reviewing your documents regularly, you can make sure your wishes are followed.
If you have getting your estate plan done on your to-do list, reach out to see if we can assist. Our phone number is (206) 408-8158. You can also learn more about our services by visiting our YouTube channel https://www.youtube.com/@dallawfirm