What Will Happen to My Estate If One of My Beneficiaries Passes Away?

What Will Happen to My Estate If One of My Beneficiaries Passes Away?

Having an estate plan can be very beneficial in ensuring that an individual’s wishes are respected if they become incapacitated or pass away. In an estate plan, a person can name beneficiaries or a person who receives the benefits left in an estate. Oftentimes, a person will name beneficiaries assuming that they will outlive them, but this is not always the case. At Andrea Heckman Law, we’re here to help explain what happens to your estate if one of your beneficiaries passes away. Our attorneys can provide expert advice in estate planning and can help you develop a plan that works for you. 

Who Can Be Named as a Beneficiary?

Illinois law outlines a beneficiary as any natural living person, a trust, corporation, charitable organization, or other lawful entities under the state. Individuals do not have to be related to the benefactor to be named as a beneficiary. The primary reason for developing an estate plan is to designate individuals or organizations to receive the benefits the benefactor outlines, such as financial gifts or property ownership. Additionally, benefactors can indicate primary beneficiaries and contingent beneficiaries. A primary beneficiary is the first person or organization outlined in an estate plan to receive any assets, while a contingent beneficiary is a secondary designation if the primary beneficiary is unable to receive the assets. 

What Happens if One of My Beneficiaries Passes Away?

Illinois allows an estate plan to be modified if it doesn’t specify what should occur if a beneficiary passes away, thus allowing benefactors to make revisions. However, if you are still in the process of drafting your estate plan, it can help to consider the possibility of a beneficiary passing away before the individual who created the plan. 

One method to name a beneficiary is to have their inheritance “lapse,” or lose validity, should the beneficiary pass away beforehand. For instance, say an estate is planned to be divided evenly among three children of the creator of the estate plan. If one of these beneficiaries dies before the person who established the will, each of the living siblings will take half of the inheritance rather than the third they would have received should their sibling be alive. 

The second method to name beneficiaries is to say that the inheritance passes “per stirpes.” Here, each living beneficiary receives their original amount of the estate if all branches of the family are set to receive an equal share. The deceased beneficiary’s descendants will then split the portion equally.  

Even if your estate plan does not use per stirpes or lapse language, your plan will still be effective if a beneficiary passes away; it will just need to be adjusted. An attorney can help you modify your plan accordingly. 

Review an Estate Plan With an Attorney

If you’re preparing to draft an estate plan, you’ll need to consider all possibilities to ensure your assets are distributed according to your wishes. Contact a Rolling Meadows estate planning attorney at Andrea Heckman Law today for a consultation.