When a Beneficiary Passes Away before a Testator in New York

One of the most repeated pieces of estate planning advice is to routinely review and update estate planning documents. It is particularly important to revise estate planning documents following major life changes or if a beneficiary under a will passes away before the testator does. If a person fails to make the necessary estate planning changes, there is a substantial risk that the gift will “lapse” and the property will end up being transferred to others in what might be an undesirable manner.


What Does it Mean if a Gift Lapses


If a gift lapses, this means that it cannot be transferred as provided under the terms of a will. One way in which New York law attempts to deal with lapsed gifts is through anti-lapse statutes. New York’s anti-lapse statute states that if an individual who would have received property under another person’s will passes away before the testator, the gift will pass to the deceased individual’s children. 


For example, Bob writes a will living his estate to Child 1 and Child 2. Child 1 has Grandchild 1 and Grandchild 2. Child 1 dies before Bob, but Bob never revises his estate planning documents reflecting Child 1’s death. When Bob passes away, the part of his estate that would have passed to Child 1 would be classified as “lapsed”. Because Child 1 was Bob’s daughter, Child 1’s portion of the estate is passed on to Grandchild 1 and Grandchild 2, who are alive when Bob dies.


Gifting to People Not Covered by the Anti-Lapse Statute


Anti-lapse statutes in New York only apply to certain types of individuals. If a person tries to pass on assets to an individual who is not covered by the anti-lapse statute, these people will not be protected. This means that if Bob attempts to leave his estate to Bob’s children and Bob’s friend Carl and Carl passes away before Bob, Carl’s portion of the estate would pass back to Bob’s estate rather than to Bob’s children. The estate can be then divided under the terms of Bob’s estate plan. 


As a result, some people include clauses in wills that transfer all residual property in an estate to a trust, which is then used to achieve the deceased individual’s goals. Trusts can play a powerful role in making sure that lapsed gifts still transfer in a manner that the deceased individual desires.


Speak with an Experienced Estate Planning Lawyer


If you pass away without an estate plan that will properly distribute your assets, you should consider working with an estate planning lawyer. Not to mention, gift lapsing as well as probate is a complex process and can result in various unforeseen complications if a person attempts to solve them on their own. 

At Ettinger Estate Planning, we understand the numerous complications that can arise during the estate planning process and what steps to make sure your wishes are achieved. Contact us today to schedule a free case evaluation.

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