How to Determine Inheritance if the Intended Beneficiary Is Deceased

Co-authored by Clinton M. Sandvick, JD, PhD

Last Updated: May 23, 2021 References

When a person dies, their estate is distributed to the beneficiaries named in their will. But what happens if a beneficiary is dead? First, you need to find out when the beneficiary died. Because it takes a long time to probate an estate, the beneficiary could have died before or after the death of the will-maker. Depending on when the beneficiary died, his or her estate could inherit the property. If the decedent passes property outside of probate, they will use trusts and beneficiary designation forms to pass property along. Because this area of state law is complicated, you should consult with a qualified attorney if you have any questions.

Part 1

Part 1 of 3:

Reading the Will

1
Analyze when the beneficiary died. The beneficiary might not inherit the property depending on when he died. For example, the will could state that the beneficiary must outlive the person who made the will for a certain amount of time (e.g., 45 days).^{[1]
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- The will can define this “survivorship period.” You should check to see if the will does include a survivorship period.
- Your state law may also state a survivorship period even if the will does not.
- If the beneficiary died outside this survivorship period, then his or her estate will take the property. For example, a woman might have died in a car crash. Her state law might set a 45-day survivorship period. Her son, who is the only beneficiary under her will, might have died 100 days after his mother but before the estate property could be distributed. In this situation, the son’s estate should inherit his mother’s property.
- However, if the beneficiary did not outlive the survivorship period, then you will need to look at alternate beneficiaries named in the will.
2
Check if an alternate beneficiary was named. Some wills will name alternate beneficiaries in case the original beneficiary dies before the deceased. In this situation, the alternate gets the property.^{[2]
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Research source} Check the will to see if an alternate was named.
- The will might state, “I leave my entire estate to my wife, Lisa J. Jones. If she does not survive me, I leave my entire state to my son, Michael A. Jones.”^{[3]
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- There may even be a second level of alternates. For example, your will could say: “I leave my entire estate to my wife, Lisa J. Jones. If she does not survive me, I leave my entire estate to my son, Michael A. Jones. If he does not survive me, I leave my entire estate to my cousin, Abbey T. Smith.”
3
Find who inherits the residuary estate. Instead of naming an alternate, some wills might state that if the beneficiary dies, then the gift will pass to the beneficiary of the “residuary” estate. The residuary is everything a person owns that isn’t specifically given to other people.^{[4]
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- Read the will. It should identify one or more people as beneficiaries for the residuary estate.
- If the residuary beneficiary has died, then an alternate might have been named. Typically, however, the residuary has multiple beneficiaries. In this situation, the other beneficiaries who are alive will continue to take the residuary estate and will divide the dead beneficiary’s portion.
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Part 2

Part 2 of 3:

Reading Your State Law

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Find your state’s “anti-lapse” statute. Historically, if there was no alternate beneficiary, then a gift would “lapse” when the beneficiary died. To prevent this from happening, every state but Louisiana has passed anti-lapse statutes.^{[5]
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- The anti-lapse statute states who will inherit the property in the event that the beneficiary is dead.
- You should find your state’s statute by searching for “your state” and “anti-lapse.” Many states publish their probate laws online.
2
Check if the deceased beneficiary was a relative. Most anti-lapse statutes apply only to certain beneficiaries. In general, they don’t apply to non-relatives. For example, if you left money to a friend, then the anti-lapse statute doesn’t kick in when your friend dies.
- In this situation, your state’s anti-lapse statute should state what happens to the gift.
- Usually, the gift either falls into the residuary estate or goes to the deceased’s heirs under your state’s intestacy laws.
3
Identify who inherits in the place of a related beneficiary. The anti-lapse statute does typically apply to grandparents or a direct descendant of a grandparent. However, the beneficiary must have left children because the children will usually inherit under the anti-lapse statute.^{[6]
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- For example, if your sister was a beneficiary, then her gift would pass to her children according to the anti-lapse statute.
- If your sister had no living children but her grandchildren were living, then her grandchildren would inherit because they are her direct descendants.
- However, if your sister had no heirs, then under most anti-lapse statutes, the gift fails. The statute should state what happens: the gift either falls into the residuary estate (and is taken by the beneficiaries of the residuary estate) or it passes according to intestacy laws.
4
Read your state’s intestacy laws. Let’s say a gift was made with no alternate beneficiary. It was also made to either a non-relative or to a close relative who didn’t leave children. In this situation, the state’s anti-lapse statute says the gift must pass to the will-maker’s heirs as if there were no will. This is called “intestacy.”^{[7]
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- Your state will have rules on intestacy. These rules will state who inherits the property when there is no will. You can find your state’s rules by searching the Internet for “your state” and “intestacy.”
- For example, in Illinois, a surviving spouse will take the entire estate unless there are children, in which case the children divide half of the estate equally and the surviving spouse gets half. If there only children, the children take the entire estate, divided equally.^{[8]
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Part 3

Part 3 of 3:

Determining the Beneficiary of Non-Probate Assets

1
Identify assets that are not subject to the probate process. When the decedent dies with a will, the process of verifying that will and distributing the estate's property is called probate. In today's world, a lot of people will avoid the probate process as much as possible by passing property to beneficiaries outside of probate. To do this, decedents will set up trusts and name people as transfer on death (TOD) or payable on death (POD) beneficiaries.
- Different assets need to be set up differently to ensure they pass outside of probate and to the correct beneficiary. If you are responsible for determining who gets a decedent's property, you need to know what the decedent owned and how they wanted it distributed. You will do this by looking at the legal documents that verify ownership and make distributions (e.g., trust documents or bank account documents).
2
Analyze trust documents. One of the main ways people avoid probate is to set up a trust. A trust is a legal document that sets aside someone's (the grantor's) property for the benefit of someone else (the beneficiary).^{[9]
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Research source} The trust document will set out exactly how the property will be transferred when the grantor passes away. In a detailed trust, the grantor will make sure that contingency plans are in place in case a beneficiary passes away before they get any distributions. If no beneficiary is alive when the grantor passes away, the trust property may revert back to your estate to be distributed in the will's residuary clause. Common trust provisions you will see include:
- Language that gives the trust property to another named individual. For example, a trust might state that "Joe Willis shall receive any cars I own upon my death. If Joe Willis predeceases me, my cars shall go to Sally Jones." This type of provision is nice because it is straightforward and clear. It is easy to see who takes the trust property if a beneficiary dies. However, this provision is not very flexible and will cause problems in situations where all named beneficiaries have predeceased the decedent.
- Distributions to groups of people. For example, a trust might indicate that "my children shall receive income for life." In this scenario, the beneficiaries are one or more persons that have a specific relationship with the decedent. If the decedent has three children, and one passes away, the other two will take the third child's share of the trust property.
3
Track down the decedent's 401(k)s and/or IRAs. When a decedent opens a 401(k) or IRA, they will likely be asked to fill out a beneficiary designation form. This form asks the decedent to name a beneficiary that will get the proceeds from these types of accounts when the decedent dies. On the form itself, the decedent will have an opportunity to name one or more primary beneficiaries, as well as one or more contingent beneficiaries.^{[10]
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Research source} Some accounts will call these POD and/or TOD beneficiaries.
- For example, assume the decedent named Devan Flaherty as their primary beneficiary. In addition, the decedent named Mike Jones and Lisa Ratner as contingent beneficiaries. According to most beneficiary designation forms, Devan will receive the account's proceeds upon the decedent's death. However, if Devan predeceases the decedent, Mike and Lisa will share the proceeds from the decedent's account equally.
4
Ask about life insurance policies. Sometimes the beneficiary for a life insurance policy dies either before the insured or before the entire policy has been paid out. In this situation, you need to see if anyone has been named as a co-beneficiary. Read the life insurance policy. Generally, if there are co-beneficiaries, then the remainder of the policy’s benefits will be paid out to the remaining beneficiary. Co-beneficiaries get paid at the same time and split the proceeds. When one dies, the other takes all of the remaining proceeds.
- There may not be co-beneficiaries. However, the policy could name a secondary beneficiary. This person is like an alternate in a will. He or she gets paid if the primary beneficiary dies. For example, someone might have named his wife as beneficiary and his daughter as a secondary beneficiary. The daughter will get paid only if the mother dies before the insured.^{[11]
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- If all possible beneficiaries have died, then the life insurance proceeds will be paid to the insured’s estate, most likely in the decedent's residuary.^{[12]
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