Estate planning deals with the distribution of property when its owner dies. But wills must also deal with the possible situation when an heir dies before receiving the property owner’s, also known as the testator, assets.
There are a couple ways to address this situation where an heir dies during estate administration. First, a will may contain a survivorship clause. This clause requires any person receiving distribution to survive the decedent for a specified time period. If this beneficiary does not survive for this period, that person is legally deemed to have died before the will’s testator and will specify who receives that beneficiary’s share.
A second method is to direct that when a beneficiary does not survive until final distribution, their share lapses and will be distributed to a contingent beneficiary. The will must contain language requiring a beneficiary to remain alive until distribution is completed.
Trusts, like wills, usually contain a survivorship requirement. These also address the situation where an intended beneficiary unexpectedly dies.
When wills and trusts do not have a survivorship requirement, the testator’s property will usually become the deceased heirs’ asset. This would be treated like other probate assets and would be transferred according to the estate plan.
This situation is not uncommon as spouses and siblings also age and become terminally ill. In addition to wills and trusts, beneficiaries on other accounts such as insurance and retirement plans should be routinely updated. This helps assure that assets go to intended beneficiaries.
Relying on commercial forms carry risks and ultimately more costs for a testator and their heirs and beneficiaries. An attorney may draft appropriate and valid estate documents that comply with Michigan legal requirements and carry out a testator’s wishes.