The early death of an estate beneficiary doesn’t have to mark the end of your estate plan. However, if left unaddressed, a deceased heir or missing beneficiary can jeopardize the integrity of your estate plan, leaving your assets—and your loved ones—at the mercy of a New York City surrogate’s court. Here, learn how to help protect your estate by obtaining legal counsel with our Brooklyn probate and estate administration attorneys at Landskind & Ricaforte Law Group, P.C.
Identifying Estate Beneficiaries
An estate beneficiary is anybody who has been selected to receive property or assets from an estate plan. Beneficiaries are often named or identified through the deceased person’s:
- Last will and testament
- Trust
- Payable-on-death accounts
- Insurance policies
Different estate planning instruments direct the transfer of assets in different ways. For example, heirs who stand to inherit from a will must wait for probate to conclude before receiving their share of an estate. In contrast, life insurance payments and trust-based distributions almost always take place outside of probate.
The Implications of an Heir’s Death
If an heir or estate beneficiary passes away before they receive an inheritance, their share of the estate must still be distributed before probate or trust administration can conclude. Here’s what you need to know:
Intestate Succession
If a person dies without a will, a trust, or another type of estate plan, they are said to have died “intestate.” New York, like most states, has strict rules on intestate succession. In general, the decedent’s assets will be distributed to their closest living relatives, with surviving spouses and children taking priority over parents, siblings, and more distant relations. Other potential beneficiaries, including stepchildren and family friends, won’t typically receive anything through intestate succession.
However, writing a will isn’t always enough to protect yourself against the risk of intestacy. Even if you already have an estate plan, an heir’s early death—along with unintentional errors, like ambiguous language in a will—can thrust the future of certain estate assets into uncertainty.
If, for example, your last will and testament only named a single beneficiary, like a spouse or child, it could be rendered invalid by the death of your heir. This may lead to estate assets being distributed in accordance with New York’s rules of intestate succession.
New York’s Anti-Lapse Law
New York has an “anti-lapse law” that addresses the early death of estate heirs. Under New York’s revised anti-lapse statute, courts will make a good-faith effort to balance the deceased person’s last wishes with the reality of a missing heir or beneficiary. In general, so long as the beneficiary dies while the testator is still alive, the inheritance will pass on to the heir’s surviving “issue.” This includes their lineal descendants, such as children, grandchildren, and great-grandchildren.
However, the anti-lapse law is limited in scope and can be applied only if a pre-deceased heir was the testator’s own child or sibling. If the beneficiary had another relationship with the testator, their estate may be subject to different rules and processes, including intestate succession.
Protecting Your Estate From Uncertainty
The early or unexpected death of an estate beneficiary can have far-reaching consequences.
You don’t have to accept uncertainty in place of solutions. Landskind & Ricaforte Law Group, P.C. could help give you peace of mind in your estate planning documents by doing the following:
Revising or Rewriting Your Will
Your estate plan only protects your heirs’ interests if regularly revised or updated.
Since the death of an estate beneficiary could leave the future of high-value assets in flux, it’s typically best to act early. Although you may be able to use a codicil to amend your will without drafting a new document, codicils are known to be risky. Even if you only make minor changes, simple discrepancies in word choices and order can create conflict with your original will, making it all the more difficult to enforce.
Landskind & Ricaforte Law Group, P.C. could help you rework your will in a way that is sensible, effective, and safe, whether that means making a minor change to your papers or rewriting your will altogether.
Assigning Contingent Beneficiaries
A contingent beneficiary is an estate beneficiary who only inherits if another heir dies or declines their inheritance. You may be able to nominate contingency beneficiaries on the following:
- Last will and testament
- Revocable living trust
- Bank accounts, savings accounts, and investment profiles
- Insurance policies
Additionally, you may be able to nominate contingent beneficiaries for specific assets or individual heirs. Your contingent beneficiary will receive an inheritance if the original heir passes away before probate begins.
Reviewing Your Beneficiary Designations
A beneficiary designation lets you name a preferred beneficiary for the proceeds of a bank account, retirement fund, or insurance policy. Since beneficiary designations take precedence over your estate plan, they cannot be altered or revoked by changing your will or trust.
Landskind & Ricaforte Law Group, P.C. could help you revive, analyze, and streamline your beneficiary designations, ensuring that you have a backup plan in place and preventing ex-spouses and estranged relatives from claiming funds you no longer wish them to have.
Establishing a Trust
A trust is a legal arrangement where a trusted party, termed the “trustee,” manages assets for the benefit of a named beneficiary or beneficiaries. Trusts can be funded with many different types of assets, including, but not limited to, the following:
- Your home
- Commercial real estate
- Cash and financial accounts
- Personal possessions
- Insurance policy proceeds
Trusts can be structured to provide a significant degree of flexibility, making it easy to nominate contingent beneficiaries and detail procedures to be followed in the event of a beneficiary’s early death. Also, as trust assets are not considered estate assets, they are generally excluded from probate and can be transferred to heirs with little need to go to court.