Occasionally, an individual named as a beneficiary in a will dies before the person who drafted the will (the testator). Who takes the gift when this occurs? It depends on the language of the will. Most estate planning lawyers draft a will with many possible scenarios in mind, thus a well-drafted will usually names at least one alternate beneficiary.
What if the will does not name another beneficiary? When the beneficiary dies before the testator and no alternate beneficiaries are named in the will, the gift is considered to have “lapsed.” What happens to the gift then depends on several factors. Texas anti-lapse laws guard against a gift from passing as if there is no will (intestate). Unless the gift is a class gift (see below), if the beneficiary is a descendant of the testator or the testator’s parents, the descendants of the beneficiary take the gift. If the beneficiary is not a descendant of the testator, the gift passes through the residuary clause of the will. Unless the will provides otherwise, if the lapsed gift is in the residuary clause, the gift will pass to the other beneficiaries of the residuary clause.
A class gift is a gift to a group of individuals (ex. to all my grandkids) rather than to specific individuals (ex. to Todd, Amy, Sally, and Mark). If the deceased beneficiary is a member of a class, the gift does not go to her descendants, but to the other members of the class. Thus, for example, if a testator makes a gift to all his grandkids and one grandchild predeceases the testator, unless the will specifies otherwise, the remaining grandkids take the share of the predeceased individual.
However, if the will makes a gift to specific named individuals, the lapsed gift passes to the descendants of the predeceased individual. For example, let’s say a testator makes a gift in his will to Todd, Amy, Mark, and Sally, all of whom are the grandkids of the testator. If Amy predeceases the testator, her share will pass to her descendants, rather than to Mark, Sally, and Todd.
Remember, the anti-lapse statute only applies if the will does not specify other beneficiaries. The lesson here is that a will should be drafted clearly and carefully, and include provisions to cover the possibility that primary beneficiaries may predecease the testator.