Thursday, March 31, 2011

Bequests - What Happens When the Beneficiary Predeceases?

An often asked question regarding the administration of Trust or Estate after a death occurs is:
1) What happens if the beneficiary predeceased the decedent?
In this age of longevity, it is not uncommon for a beneficiary named under the terms of a Trust or a Last Will and Testament to predecease the individual creating the Trust (the “Trustor”) or the individual creating the Last Will and Testament (the “Testator”).  When this occurs, what happens to the bequest?  For example, a Trustor provides that a specific bequest of $50,000.00 be given to her son, Joseph.  However, Joseph predeceases the Trustor.  When the Trustor dies, what happens to the bequest?  Does it lapse and become null and void?  Or is it still legal effective?  The answer is it depends on the terms of the Trust or Will and the facts of the situation.  Nevada has an anti-lapse statute which provides that a bequest is saved and does not lapse if the predeceased named beneficiary is a child or other relation of the Trustor-Testator and the beneficiary left lineal descendants who survived the Trustor-Testator, unless the Trust or Will provides otherwise.  NRS 133.200 provides as follows:
When any estate is devised to any child or other relation of the testator, and the devisee dies before the testator, leaving lineal descendants, those descendants, in the absence of a provision in the will to the contrary, take the estate so given by the will in the same manner as the devisee would have done if the devisee had survived the testator.”
In our example above, the predeceased beneficiary, Joseph is a child of the Trustor-Testator.  If Joseph left lineal descendants (child, grandchild, et cetera) and the Trust or Will does not provide otherwise, the $50,000.00 bequest will not lapse but will pass to Joseph’s lineal descendants.  This may or may not be what the Trustor desires.  When one creates a Trust or Will, one should always discuss and consider the possibility of a beneficiary predeceasing.  If one does not want the bequest to pass to Joseph’s lineal descendants, the Trust or Will should specifically state that in the event Joseph predeceases, the bequest shall lapse or shall pass to some other beneficiary. 
At the Jeffrey Burr law office, we have many years of experience in assisting clients in their estate plans through the drafting and execution of their Trusts/Wills.  As part of this service, we go to great lengths to determine exactly what the client desires, including the client’s wishes in the event a named beneficiary predeceases the client.     
 - Attorney John Mugan

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