{Read in 4 Minutes} As a Trusts and Estates attorney, I frequently represent Executors and Administrators of Estates. An Executor’s or Administrator’s job involves collecting the assets of the Estate and paying any funeral costs, debts, and expenses of administration, including the Executor’s or Administrator’s compensation, and then distributing the remaining funds among the beneficiaries of the Estate. When making this distribution for someone who died with a Will, the terms of the Will instruct the Executor what to do with the money.
What if one of the beneficiaries is deceased? Well, it depends on what the Will says, and if the Will is silent on this issue, certain statutory defaults apply. A good Will will address what most Trust and Estates lawyers call “the parade of horribles” — what happens if the people you love the most in the world die before you? It’s not a fun conversation to have with a client, but it’s practical because sometimes beneficiaries die before the person whose Will included them as a beneficiary. A good Will will state the beneficiary’s interest and whether or not it’s contingent upon their survival. For example:
“I leave my sister the cash sum of $30,000 if she survives me.” Or “I leave my sister the cash sum of $30,000 if she survives me, or if she does not survive me, to her children who shall survive me, in equal shares.”
In these examples, the Executor has clear instructions on whether the bequest survives the deceased’s sister or not. What happens if the Will simply says, “I give $30,000 to my sister,” or “I give $40,000 to my children in equal shares?” If the Will does not condition inheritance upon survival or doesn’t otherwise state what happens to the funds if the beneficiary is deceased, New York statutes provide an answer. New York’s anti-lapse statute known as EPTL Section 3-3.3, provides that whenever a deceased has left a bequest to a sibling or a descendant (child, grandchild, great-grandchild, etc.), the bequest does not lapse, rather it goes to the descendants of the deceased beneficiary.
Here are some examples:
The Will provides:
1. “I leave $30,000 to my sister if she survives me.”
The sister dies before the deceased. The bequest lapses, and neither the sister, nor the sister’s Estate, nor the sister’s descendants inherit the bequest.
2. “I give $30,000 to my sister.”
The sister dies before the deceased. In this example, the anti-lapse statute applies. Because the Will doesn’t say otherwise, the sister’s bequest would descend or go to her children in equal shares (if she had any). If the sister did not have any descendants, the bequest would lapse.
3. “I give $40,000 to my children who survive me, in equal shares.“
Note that here, the Will only leaves the money to the surviving members of the class of children. Therefore, only the children who survived the deceased will inherit. If they all die before the deceased, the bequest lapses.
4. “I give $40,000 to my child, John Smith.”
If John Smith dies before the deceased, the bequest does not lapse if John Smith left descendants who could inherit these funds. Again, the anti-lapse statute applies.
While this may seem a little confusing at first blush, it is actually something that is very important. People die all of the time, and it’s essential that Executors understand what happens to these bequests. A statute that makes it clear prevents the Executor from having to ask the Surrogate’s Court for guidance in the context of an accounting proceeding concerning how to pay the bequest.
For more information on this topic, please contact me.