Do You Know What Happens to Your Assets if a Beneficiary Dies Before You?
In Doreen’s Last Will and Testament she devises “$10,000 to my daughter, Sally”. What happens to the devise if Sally dies before Doreen? The devise “lapses” and is distributed pursuant to Sally’s residuary clause in her Last Will and Testament, perhaps in a way that Sally did not intend. Florida has enacted “anti lapse” statutes that direct where such a devise is distributed if no language is included in the Last Will and Testament which provides otherwise. Until recently, the answer was different depending on whether the devise was made in a Last Will and Testament or a trust.
In the above example, if, at Doreen’s death, her assets are titled in her name and the assets are distributed through a probate proceeding , Section 732.603 of the Florida Statutes provides those assets would be distributed to Sally’s children. What if Sally wasn’t a relative of Doreen? Then the gift WOULD lapse and would be distributed under the residuary clause of Doreen’s Last Will and Testament. Florida law presumes that Doreen would want her daughter’s gift to be distributed to her daughter’s children (Doreen’s grandchildren) but does NOT presume that Doreen would want Sally’s gift to be distributed to Sally’s children if Sally was not Doreen’s daughter.
Until July 1, 2014, Section 736.1106 of the Florida Statutes, provides that the result in a trust would be the opposite. Even if Sally was not a relative of Doreen, Sally’s children would take the devise. For example Doreen provides in her trust that “I distribute $10,000 to my favorite yoga teacher, Madeline.” It is highly unlikely that, if Madeline died before Doreen, that Doreen would want the devise to be distributed to the Madeline’s children but that was the result under the trust code.
Luckily new Section 736.1106(2) of the Florida Statutes applies the more common probate rule to trusts and Madeline’s children would not take Madeline’s devise. This result is more consistent with a decedent wishes.
ADVICE: These anti lapse statutes are default statutes which only apply if the document does not provide otherwise. Good drafters should always provide in the document what happens if a beneficiary doesn’t survive the decedent. For example: ” I give $10,000 to Sally, if she survives me, and if Sally does not survive me , then to my son, George, if he survives me, and, if George does not survive me, then to XYZ charity.” Read your documents and be sure that you know where the assets are distributed if a named beneficiary predeceases you. You may think that you could always change the document but many times you may forget or worse you may not be physically able to make those changes.
GENEROSITY IS A KEY TO HAPPINESS …REACH OUT AND HELP SOMEONE TODAY!