Last Will and Testament
When they're drafted by legal professionals, most wills include language that anticipates the possibility that a beneficiary might predecease the person leaving the will. They provide for contingent beneficiaries, a second individual who receives the bequest if the initial beneficiary is no longer alive. If the initial beneficiary dies, his bequest passes directly to the individual the testator named as a contingent beneficiary.
Lapses Under the Will
When individuals draft their own wills without legal guidance, they may neglect to include contingent beneficiary clauses. In this case, when a beneficiary dies, his bequest “lapses” in legal terms. Generally, the gift reverts back to the decedent's estate and the will's executor divides it among his other beneficiaries. In some cases, when a will leaves the entirety of a decedent’s estate to only one individual, there are no other beneficiaries. The lack of anyone else to accept the estate will force the court to probate it according to intestacy laws, as though the decedent had not left a will at all. The lapsed gift then goes to his heirs, individuals who are related to him. This usually only occurs when a decedent leaves his entire estate to his spouse, with no provisions for his children or if he has no children.
When a decedent dies without leaving a will, the only individuals who can possibly inherit from him are his heirs. Without a will, he has no named beneficiaries. Each state has its own laws for intestate succession. However, spouses generally inherit first, followed by children and their children, then parents, then siblings, nieces and nephews. These laws are specifically designed to anticipate that some of these people might no longer be living and include specific language to that effect. If there is no surviving spouse, the decedent’s estate automatically goes to the next heirs in line, his children. If he has no living children and no grandchildren, his property passes to his parents. Generally, an estate will only escheat, or go to the state, if the probate court can find no living relative at all.
Assets such as life insurance policies or retirement plans usually have named beneficiaries and bypass the probate process. Like wills, most insurance policies and retirement plans name contingent beneficiaries in the event the first one dies. If the initial beneficiary dies, benefits transfer to the second individual. If a policy or plan does not name a contingent beneficiary, the proceeds usually pass to the decedent’s estate, but this depends to some extent on his state's laws. If the decedent left a will, proceeds are divided among his beneficiaries. If he did not leave a will, they pass to his first living heir under his state’s intestacy laws.