In the majority of estate plans, the heirs are pretty clearly outlined. Typically spouses and children are the most commonly listed heirs. Choosing children as heirs to your inheritance makes sense. After all, most people want their life’s hard work to go toward the betterment of their children’s lives. Due to age differences, children will usually outlive their parents, as well.
But, what happens when you outlive an heir? What becomes of the inheritance you wanted to be passed on to him or her?
If You Don’t Have a Will or Trust
The answer depends on what kind of estate planning you have (or have not) done so far. For example, if you don’t have a will or trust in place, then you are likely to have little say in what becomes of your assets upon your death. Instead, your estate will go into probate, and the state of California will disseminate your assets based upon the law. The courts will determine your “heirs at law,” which it uses to give your assets to your closest blood relatives.
Of course, this can pose some problems in a modern culture where we have so many blended families. For example, part of your estate might go to a half-sibling due to blood ties, instead of to step-children whom you raised as if they were your own. Worse yet, if your spouse leaves his or her estate to you and you pass away without having done the appropriate estate planning, whatever is left would go to your blood relatives and not to those of the spouse.
In this case, if your intended heir dies before you do, it won’t make much difference, as he or she just won’t be considered in the probate process.
If You Have Estate Planning Documents
If you have put together your will and/or trusts, then you will have named beneficiaries. This is where the question of “what happens if my heir dies before I do” really comes into play. If you survive one of your children, then who gets his or her share when you die?
The best way to resolve this kind of question is to work with your estate planning attorney from the beginning to name alternate beneficiaries. This way, if one heir is unable to claim inheritance, there is a plan in place for what should become of it. You will likely also want to choose an alternate executor for the same reasons.
Unfortunately, many estate planning attorneys will overlook the importance of naming alternate heirs. Instead, they may just rely upon the idea of “heirs at law” as described above. You may be comfortable with this approach, but if not, it’s a good idea to bring it up to your attorney to make sure you are able to set up a workable solution which is within California state and Federal laws.
Steve Greenwood, Esq.