Creating a cohesive and comprehensive estate plan will ensure that your loved ones are cared for in the event of your passing. In order to create a successful estate plan, it is important to plan for all possible outcomes. One outcome to plan for is the death of a beneficiary. Read on to learn more.
What is a beneficiary?
A beneficiary is anyone who has been named in an estate plan who will receive an inheritance from the owner of the estate. Often, beneficiaries are children, partners, and other close relatives. A major part of estate planning is ensuring that your beneficiaries are cared for in the event of your passing.
What happens if a primary beneficiary passes away?
If you have listed someone in your estate plan and they pass away, you have a number of different options:
- Alter your estate plan: If a loved one listed in your estate plan passes away, you may need to alter your estate plan. In fact, this is something you should do every 2-5 years. It is important to update your estate plan every time there is a major life event, including marriage, divorce, the birth/adoption of a child, and more.
- Lapse: It is possible to plan ahead for the passing of a beneficiary. One way to do this is by designating that the inheritance lapses. This means that their portion of the inheritance is essentially distributed equally to other beneficiaries. For example, if you have 5 beneficiaries and each beneficiary is set to inherit 1/5 share and one person passes away, the remaining beneficiaries will receive now receive 1/4 share.
- Per stripes: This means that the inheritance that would have gone to the beneficiary will instead go to their children. If this beneficiary does not have children, the inheritance will lapse.
- Alternate beneficiary: You can also name alternate beneficiaries. This means that if the primary beneficiary passes away, their share will go to the “second in line” beneficiary.
In order to ensure that you have covered all of your bases when it comes to estate planning, it is important to work with an experienced and dedicated attorney. Reach out to our firm to explore all of your options.
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Sometimes, divorce, family, and estate matters are difficult to navigate. Fortunately, they do not have to be with the assistance of a compassionate, knowledgeable attorney who is willing to guide you every step of the way. If you need a seasoned firm to help you with any divorce, family or estate-related matter, please do not hesitate to contact Collis, Griffor & Hendra today to schedule a consultation.