What Happens if One Primary Beneficiary Dies?

Protecting your loved ones requires establishing an effective estate plan that ensures that your assets are distributed according to your wishes while easing the tax burden on your heirs. When you created your estate plan, you no doubt made the assumption that your beneficiaries will live longer than you. However, it is sometimes the case that a primary beneficiary dies first, which gives rise to various questions, including who stands to inherit assets designated for the deceased beneficiary. 

This is just one of the complexities of estate planning that requires the help of a knowledgeable and experienced legal professional. Reach out to Brady, McFarland & Lord, LLC, and our Longmont estate planning attorney for questions regarding all facets of estate planning, from gift and estate taxes to probate and trust settlement.

The Death of a Beneficiary – Ramifications on Wills and Trusts

When a primary beneficiary—which is essentially a chosen heir—dies prior to the estate creator’s death, then problems can arise if the estate plan does not list a contingent beneficiary. This designee may also be known as a second-in-line beneficiary. 

Most estate plans are thorough and include contingencies in the event that a primary beneficiary predeceases the estate plan’s creator. However, if the contingent beneficiary is not mentioned in the original estate documents, it is possible for the person who created the will or the trust to amend their estate plan to add the new beneficiary’s information. 

Per Stirpes Passage of Inheritance

Another method for naming beneficiaries when planning an estate is what is known as “per stirpes,” which translates to “by branch” in Latin. A designation of “per stirpes” simply means that if a beneficiary dies prior to the estate creator’s passing, then the beneficiary’s share of the estate automatically goes to the beneficiary’s offspring. In this setup, other named beneficiaries receive the portion of the inheritance intended for them, while the deceased beneficiary’s portion goes to his/her heirs in equal parts. For example, if the deceased beneficiary has two children, both children would receive 50 percent of their estate. 

No Beneficiaries Remaining: What Happens Then?

Although rare, an estate planner may also suggest planning for the unlikely scenario that an entire family passes away at once—due to a plane crash, for example. A common disaster distribution plan allows the estate’s creator to determine what will become of the assets in the estate if such an occurrence happens. Commonly, estates may fall to the closest living relatives—also known as heirs-at-law. In other cases, the testator may decide to designate that the estate is given in whole or part to one or more charities or other causes to which they are affiliated. 

Protect Your Legacy 

At Brady, McFarland & Lord, LLC, our estate & business planning lawyers in Colorado are ready to help you create the right estate plan for you and your family. Our team has a broad range of experience helping clients set up trusts, conservatorships, and guardianships, and we offer help with estate and Medicaid planning. Schedule an appointment to discuss your needs with our caring, compassionate staff.