In the realm of trusts and estate planning, “lapse” refers to the failure of a gift or bequest within a will or trust to take effect because the intended beneficiary is no longer alive at the time the gift is meant to be distributed; it’s a surprisingly common occurrence, and understanding its implications is crucial for effective estate planning. A lapse generally happens when a beneficiary predeceases the grantor or testator (the person creating the will or trust) and there’s no contingency plan in place to address such an event. This can create unintended consequences, potentially leaving assets undistributed or falling into default distribution schemes that weren’t the original intent of the estate plan; approximately 5-10% of estate plans encounter issues with lapsed bequests due to unforeseen circumstances.
What happens when a beneficiary dies before receiving their inheritance?
When a beneficiary predeceases the grantor without a clear directive in the trust document, the gift or bequest “lapses” – meaning it fails. The assets don’t simply disappear, however; they revert to the remainder of the trust, or if there is no remainder, they’re distributed according to state intestacy laws (laws governing distribution of property when there’s no will). This can lead to assets going to unintended recipients, a situation no careful planner wants. For example, imagine a grandparent intending a specific sum for their grandchild’s education but the grandchild tragically passes away before receiving the funds; without a provision for this, the money might end up being distributed to other family members instead of being used for educational purposes. A well-drafted trust should anticipate such possibilities.
Can I prevent a lapse with a “per stirpes” or “per capita” distribution?
Absolutely. Two common clauses used to prevent lapsing gifts are “per stirpes” and “per capita.” “Per stirpes” (meaning “by branch”) directs that a deceased beneficiary’s share be distributed to their descendants, effectively carrying the inheritance down to the next generation. This is often favored when the grantor wants to ensure that the family line continues to benefit. “Per capita” (meaning “by head”) distributes the share equally among the surviving beneficiaries. A recent study by the American College of Trust and Estate Counsel (ACTEC) showed that approximately 65% of trusts include either a per stirpes or per capita clause, demonstrating a clear understanding of the importance of avoiding unintended consequences. These clauses ensure that assets continue to flow to the intended family line even if a beneficiary is no longer living.
I knew a man named Harold, what went wrong in his estate plan?
Harold, a retired carpenter, meticulously crafted a trust years ago, intending to leave a substantial portion of his estate to his son, Michael, and daughter, Sarah. He hadn’t updated it in over two decades. Tragically, Michael passed away unexpectedly before Harold. Harold’s trust didn’t include a provision for what should happen if Michael predeceased him. As a result, Michael’s share, intended for his children, lapsed and reverted back to Sarah, creating a significant imbalance in the distribution and causing substantial friction within the family. He had intended for his grandchildren to benefit, but a simple oversight meant they received nothing. It was a painful lesson in the importance of regular review and updates to any estate plan.
How did Mrs. Eleanor get it right with proper planning?
Mrs. Eleanor, a savvy retired teacher, came to Steve Bliss after witnessing the issues Harold’s family faced. She had a clear vision for her estate, wanting to ensure her grandchildren benefited regardless of what happened to their parents. Steve Bliss crafted a trust that included both a “per stirpes” clause for her children and a specific provision outlining what would happen if a child predeceased her. This meant that if a child died before receiving their inheritance, their share would pass to their children – Eleanor’s grandchildren. When, sadly, her daughter passed away unexpectedly, the trust seamlessly distributed the intended inheritance to her daughter’s children. Mrs. Eleanor’s foresight and proper planning ensured her wishes were honored, providing financial security for her grandchildren and avoiding any family disputes. She told Steve Bliss, “Peace of mind is priceless, and knowing my grandchildren are taken care of is all I ever wanted.”
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About Steve Bliss at Wildomar Probate Law:
“Wildomar Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
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Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RdhPJGDcMru5uP7K7
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Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
(951)412-2800/address>
Feel free to ask Attorney Steve Bliss about: “How does a living will differ from a regular will?” Or “What is the role of a probate referee or appraiser?” or “What happens if my successor trustee dies or is unable to serve? and even: “What property is considered exempt in bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.