Estate planning is essential in protecting your loved ones and giving them peace of mind. When a person makes a beneficiary in their estate plan, they assume that the beneficiaries will outlive them. But, sometimes, things do not go as they are planned.
From this issue, several questions arise. The most common is,” Who will inherit if the beneficiary passes away?” Therefore, you must contact a Monroe estate planning lawyer.
What happens when the primary beneficiary dies
The beneficiary is the person who will receive the inheritance from the creator of the estate plan upon their passing. Beneficiaries are the important portion of an estate plan as they are crucial reasons to create it. The reason for taking the time to develop a sufficient estate plan is so you can name the heirs to inherit from you.
An estate plan has different types of beneficiaries–primary and contingent. Still, not all beneficiaries have to be people or classes of individuals. Beneficiaries can also be organizations.
The primary beneficiary is the one who inherits first from the trust or a will. Conversely, a contingent beneficiary is a person who inherits if the primary beneficiary dies.
If the beneficiary dies, the person who appointed the trust should go back and amend the estate plan. Although it is never intended for if a beneficiary passes away, the creator should consider a thorough estate plan for the possibility. Even if the estate plan is not considered, the strategy will still be effective.
Plans for beneficiaries
When beneficiaries are named for an estate plan, there are two common ways for their inheritance to take. Both the ways will consider the chances of the beneficiary predeceasing the person who established the estate plan. The first way to designate a beneficiary is by saying their inheritance “lapses.” It means that the beneficiary passes away before the creator of the estate plan.
For example, if a person has four children and the estate plan states their inheritance will lapse if the plan’s creator dies. The children will take equal shares of the estate plan, but what happens when any one of them predeceases before the creator? In that case, the estate plan will be divided by 1/3rd share to every child.
Another way of passing the inheritance is by saying ‘per stripes.” If a beneficiary passes away, the share will go evenly to their descendants or children.