Probate can be a complex and complicated process under the best of circumstances and when everything goes as planned. Things don’t always go as planned though. For example, a beneficiary could also pass away during the probate of an estate. An Indianapolis probate attorney at Frank & Kraft explains what happens if a beneficiary dies during the probate of an estate.
What Happens During Probate?
To understand the impact a beneficiary’s death might have on the probate of an estate, you must first have at least a basic understanding of the probate process itself and why it is necessary. Most people leave behind assets when they die that make up their “estate.” A decedent’s estate could include nothing more than a small sum in a bank account and personal belongings or it could involve complex assets worth millions of dollars. Whether an estate is modest or extremely valuable, the law wants to ensure that the assets that make up that estate are passed down to the intended beneficiaries or to the legal heirs of the estate. It is for this reason that probate is usually required. Probate is the name given to the legal process that ultimately transfers a decedent’s assets to the beneficiaries and/or heirs of the estate. Note that, although they are similar, a beneficiary and an heir are not the same. A beneficiary refers to someone named in the decedent’s Will or a trust while an heir is someone who stands to inherit from the decedent under the state’s intestate succession laws if the decedent failed to leave behind a Will or trust.
How Does a Beneficiary’s Death Impact the Probate of an Estate?
Probating an estate can take a long time to complete. That is one of the reasons why probate avoidance is such a common estate planning goal. Probating even a relatively modest estate without complex assets can often take several months while an estate with high value and/or complex assets can take years to probate. Given the length of time it can take to get through the probate process it is possible for a beneficiary to die before the end of the process. While it is not something that happens with any regularity, it can happen and it helps to know how it will impact thee probate of the estate if it does.
The general rule is that if a beneficiary dies during probate but prior to the point at which assets earmarked for him/her have legally been transferred into his/her name, those assets become part of the deceased beneficiary’s estate. For example, if you gifted an investment account to your aunt Becky in your Will, and aunt Becky died before the funds in that account were legally transferred to Becky, the assets would become part of Becky’s estate. As such, the assets would become the property of whoever Becky named as the beneficiaries of her estate in her Will or trust. In the alternative the property would go to her legal heirs if she died intestate (without a Will.) The important point to remember is that the assets become part of the estate of the deceased beneficiary.
Every general rule has at least one exception to that rule. In this case, there are two important exceptions to the basic rule regarding the death of a beneficiary prior to the completion of probate. Both exceptions only potentially apply if the beneficiary died shortly after, or at the same time as, the decedent. In that case, the terms of the decedent’s Will might dictate that the assets pass to a different beneficiary.
For example, imagine once again that you gifted your investment account to aunt Becky in your Will. Unfortunately, however, Becky was in the collision with you when you were killed and she died shortly after you did. The terms of your Will might dictate that a beneficiary must survive you by a specific amount of time (such as 72 hours) in order to inherit from your estate. If Becky did not live long enough, the property will not become part of her estate. Instead, it will pass to whoever is next in line according to the terms of your Will.
The second exception involves the same fact pattern except your Will is silent on the issue of how long a beneficiary must survive you in order to inherit. In that case, state law may fill in the blanks. Often, state law requires a beneficiary to survive for a specific period of time in order to inherit from a decedent.
Contact an Indianapolis Probate Attorney
For more information, please download our FREE estate planning worksheet. If you have additional questions relating to the death of a beneficiary during probate, or about probate in general, contact an experienced Indianapolis probate attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.