What is a beneficiary?
A beneficiary is named in a Will or through the laws of intestacy as the recipient of a gift (cash or possession) or an inheritance from the testator’s estate.
A testator can choose whomever they wish to be a beneficiary of their estate this includes family, members, friends, organisations, and charities. If the deceased did not have a valid will then the beneficiaries of their estate or decided through the laws of intestacy.
Beneficiaries have certain rights that are protected by law this is to help ensure that the estate is distributed according to the testator’s wishes.
What happens when there is a predeceased beneficiary?
When a beneficiary passes away before the testator their benefit from the estate will Lapse. This means that their death has rendered their gift void. In this circumstance, the share of the estate that they would have received will be returned and become a part of the residual estate which will be distributed amongst the estates Residual beneficiaries.
There are certain exceptions to this rule, the most of common is applicable when the predeceased beneficiary was a direct descendant of the testator. If a gift in a will is made to a person’s lineal descendant (child or grandchild for example) their inheritance will not lapse if the named descendant has surviving children at the time of the testator’s death. (The Wills act/ s33) This does not apply when the gift that the predeceased issue was given was a life interest.
The other most common exception to the Lapse rule is when the testator makes alternative provision in their Will for the circumstances in which a beneficiary has predeceased them. This means the lapse rule does not apply as the testator has provided direction for what to do with a predeceased beneficiaries share. There are different ways of expressing this under the terms of a Will. Some examples are “in the circumstances that one of my named beneficiaries was to predecease me their share of my estate should be redirected to (name of alternative beneficiary)” or “my children, those who are alive at the time of my death, shall inherit.” This clarifies that the surviving children will inherit and not the children (or Issue) of any predeceased children.
What happens if a beneficiary dies after the testator but before they inherited?
When a beneficiary dies after the testator but before the completion and distribution of the estate the deceased’s beneficiary’s estate will still inherit their share. The assets that are inherited to their estate will be treated as their own and will be distributed according to the wishes in their Will or if they had no Will the laws of intestacy.
It is possible to have a clause written into a Will, known as a survivorship clause, to account for the circumstance of a beneficiary passing away during the estate administration. This clause allows the testator to dictate where the assets should be redirected in this eventuality. This clause can state a set amount of time that a beneficiary must survive them in order to inherit; this time period is normally 28 days.
Similarly, to the survivorship clause, an inheritance can be subject to certain conditions for example that a person must reach a certain age in order to inherit. If this requirement is not met, for example, if the beneficiary was to pass away before reaching the specified age, their estate cannot claim the benefit upon their death.