What Happens If A Beneficiary Dies Before Receiving An Inheritance?

Beneficiary
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The death of a beneficiary scenario can arise in settling either a probate estate or a trust administration. The beneficiary’s death affects both the administration of the first decedent’s probate estate or trust and the administration of the beneficiary’s own estate.

When the beneficiary of a deceased person’s probate estate or living trust dies during the course of administering the estate and before the full distribution of the inheritance has been made, things can get sticky.

For example, a mother dies and her estate is in the process of being probated when her son dies. The son’s estate can claim his inheritance, which will in turn be distributed to the beneficiaries of his estate, according to a recent article, “Beneficiary dies prior to receiving inheritance” from the Lake County Record-Bee.

This might require probating the deceased child’s estate. Whether or not a full probate is required, depends both on the value of the son’s own estate, which is increased by the amount of the unreceived inheritance.

Depending on where you live, if the estate is under a certain amount, probate may not be required and the estate can often be settled by affidavits.

This type of situation illustrates the benefits of holding assets in a living trust. A properly funded trust avoids probate.

Who will inherit the son’s estate? If he had a last will and testament, it is the governing document. If he had a revocable living trust, then he likely will also have a “pour-over will,” which “pours” everything over from the estate to the revocable living trust.

Either way, it’s likely the son’s assets will need to be probated. With no will, the son’s heirs inherit according to the laws of intestate succession.

If the estate has been planned properly, even the complex situation described above will be more manageable. If neither the mother nor the son had an estate plan, it could take many years to unravel the estates. An estate planning attorney can create a plan that is designed with the laws of your state in mind and address many unexpected situations.

Reference: Lake County Record-Bee (December 7, 2019) “Beneficiary dies prior to receiving inheritance”

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