Page 15 - 2018 Senior Scene Magazine February
P. 15

What Happens if a
Bene ciary Dies?
By Attorney Truman Scarborough
All of our bene ciaries (those who inherit our estates) will someday die. Not planning for what will happen if a bene ciary dies can have unexpected and costly conse- quences. In this article we will examine some of the prob- lems that may be encountered when a bene ciary dies 1] before the person who is making the gift dies, 2] after the person making the gift dies but before receiving the gift, and 3] after receiving the gift.
1] If the bene ciary dies before the person making the gift: The law prohibits us from leaving property to a de- ceased person. When there are no named living bene cia- ries, transfer on death (TOD) and payment on death (POD) accounts as well as life insurance policies are paid to the decedent’s estate, requiring probate. If all the bene ciaries have died, new bene ciaries must be named.
A will or trust can anticipate the demise of multiple bene ciaries and offer a variety of options for distribution. Nevertheless, when there are no surviving bene ciaries
the gift will lapse (go away) unless protected under Flori- da’s anti-lapse statutes (discussed below). When a speci c gift (e.g. $10,000 or the home) lapses it becomes part of the residual estate (what is left after distributing speci c bequests). If the lapsed gift is part of the residual estate, it goes back into the pot to be divided among the remaining residual bene ciaries. If all the residual bene ciaries named in the will or trust have died, the estate goes to those per- sons who would inherit under Florida Statutes when there is no will.
Florida’s Probate and Trust Codes have anti-lapse provisions. These provide that a gift will not lapse if the
Senior Scene® | February Issue
deceased bene ciary is a descendant of a grandparent of the person who created the will or trust. The inheritance will go to the deceased bene ciary’s lineal descendants (children, then grandchildren). If there are no direct lineal descendants, the inheritance goes to the grandparents’ lineal descendants (aunts/uncles, then nieces/nephews). However, rather than relying on Florida’s Anti-Lapse Stat- utes, it is best to specify who will receive a gift if the pri- mary bene ciary dies.
2] If the bene ciary dies after the person making the gift but before distribution: If the bene ciary survives the person creating the will or trust but dies before receiving the gift, the gift is distributed to the deceased bene ciary’s probate estate. This will delay closing the primary estate until a probate estate is opened for the deceased bene - ciary to receive the distribution. A way to avoid this is by having bene ciaries direct who will receive their inheri- tance should they die before distribution.
3] If the bene ciary dies after receiving distribution: Once a bene ciary has received the inheritance, it is the bene ciary’s. When the bene ciary dies, it will be part of his/her estate. But what if you do not want it to be a part of a child’s estate? Perhaps you prefer not to have it go
to the child’s spouse. A way to prevent this is to hold the child’s inheritance in trust for him/her and specify who will receive the balance upon the child’s demise. A sequence of trustees should be named who could reasonably be ex- pected to survive the child,  rst to make distributions over the child’s lifetime and then at the child’s demise, make distribution of the remaining funds to the  nal bene cia- ries.
For further information you may be interested in Attor- ney Truman Scarborough’s Booklet on Estate Planning in Florida. It is available without charge or obligation by call- ing (321) 267 - 4770. His of ce is located at 239 Harrison Street, Titusville, Florida. SS
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