What Happens If a Beneficiary Dies Before Receiving Their Inheritance?

Crafting a will or making an estate plan is a responsible decision that gives you control over how you want your property and assets distributed after your passing. Most people draft an estate plan believing the beneficiaries they name will outlive them.

Unfortunately, that is not always how things turn out, and sometimes beneficiaries pass before they receive their inheritance. Here’s what happens in those circumstances.

If the Beneficiary Dies Before the Will Maker

A will is a legal document that allows a person to dictate how they want their property and assets to be distributed after death. The executor manages this distribution and is responsible for implementing the terms of the will. Beneficiaries are individuals or entities named in a will, estate plan, or other financial instrument who receive the assets of another person after the principal’s death.

So, who inherits when a beneficiary dies? When a beneficiary passes away before the individual who made the will, ideally, the person who commissioned the will should go back and amend the document, removing the deceased individual as a beneficiary and potentially leaving their assets to another.

If the Beneficiary Dies Before the Will Maker, But Before Distribution

If a will is not amended after a beneficiary passes away, it can cause confusion and legal challenges, especially when there are multiple beneficiaries. Depending on the language of the will, several possible scenarios exist. If there is only one named beneficiary, the beneficiary’s share reverts to the estate, and assets and property pass to the deceased’s heirs according to the state’s intestate laws.

Michigan’s anti-lapse law may also affect the outcome when a beneficiary passes away and that beneficiary is a grandparent, a grandparent’s descendant, or a stepchild. The law presumes that the person who created the will would want the beneficiary’s descendants to inherit their portion of the estate.

Contingency Provisions Upon Death of Beneficiary

The rules change if a beneficiary passes away and the will or estate plan names contingent beneficiaries. Generally, the contingent beneficiary inherits the deceased primary beneficiary’s estate portion if the primary beneficiary dies. However, assets can be distributed differently depending on the stipulations in the will, if any were made, such as per stirpes or per capita with representation. These terms mean:

• Per Stirpes – When a will or estate plan does not specially identify which individual should get a particular asset, the distribution can be made per stirpes, meaning to the next generation of the beneficiary. When the beneficiary dies, their descendants would split that person’s portion of the inheritance.
• Per Capita with Representation – Per capita distribution occurs when assets are divided by the number of heirs and distributed equally to descendants in the generation nearest to the deceased beneficiary.

Consult a Michigan Estate Planning Attorney Today

You can take control of your legacy and protect your family by working with an experienced estate planning attorney who is familiar with Michigan’s estate planning and probate process. At Alward Fisher, we want to help you ensure your final wishes are fulfilled by crafting a personalized estate plan that addresses your needs.

Contact our office today and request a confidential estate planning consultation.