What To Do When A Primary Beneficiary Passes Away?

Brad Smith • January 11, 2022

A thorough estate plan is critical to protecting loved ones and providing peace of mind. When a person creates an estate plan, they are assuming their beneficiaries will outlive them. Unfortunately, this is not always the case.


From this issue arises many questions. The most common question being is, “Who inherits if the beneficiary has passed away?”

What Happens To The Trust When A Beneficiary Dies?

When a beneficiary of a trust or a will dies the person who established the trust or had the will drafted should go back and amend their estate plan. Sometimes as estate planners we get asked, “If a beneficiary dies, does our estate plan no longer have effect?”


Although a beneficiary passing away is never planned for, a thorough estate plan should take this possibility into consideration. Further, even if the estate plan does not take this into account the estate plan will still be in effect, it will just be modified.


When naming beneficiaries for an estate plan, there are two common paths for their inheritance to take. Both paths consider the possibility of the beneficiary predeceasing the person who is creating the estate plan.


The first way to name a beneficiary is to say their inheritance “lapses.” What this means is that if the beneficiary passes away prior to the creator of the estate plan, the inheritance that was set to go to them is no longer in effect.


The second way to name beneficiaries for an estate plan is to say their inheritance passes “per stirpes.” This is a Latin term and means “by branch,” which will make more sense shortly.


The easiest way to think of a per stirpes designation is this: if a beneficiary dies before you do, their share of your estate will automatically and evenly go to their descendants, their children or child. If your estate is set up to be distributed “per stirpes” and a beneficiary dies, each named, living beneficiary would receive their original portion of your estate. Any descendants of the deceased beneficiary would split that portion of the inheritance equally.

Alternate Beneficiaries Or Options

Another option outside of making an inheritance pass per stirpes or having the inheritance lapse should the primary beneficiary pass away is to name alternative beneficiaries in the will or trust. In this way, the creator of the estate plan can name multiple individuals in a descending order to inherit.


This can sometimes be the best option depending on the situation of the intended beneficiaries as well as the goals of the person creating the estate plan.

No Alternate Beneficiaries

So what happens if the will or trust does not name any alternate beneficiaries? Is the estate plan still in effect?


The good news on this is that the estate plan will still be in effect. The default for a situation where there are no alternate beneficiaries is that the inheritance lapses. This does raise the question concerning what happens if all the primary and alternate beneficiaries pass away at the same time. Although this is an exceedingly rare circumstance, it does occasionally happen.


So what happens in the situation where the entire family passes away in a single event? A comprehensive estate plan will also take this possibility into effect. Often this portion of the estate plan is called the “Common Disaster Distribution Plan.” In this provision of the estate plan the creator of the plan can choose what to happen if all the primary and alternative beneficiaries are deceased.

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With licensed attorneys and offices located in both Illinois and Missouri, we are well-equipped to serve clients in these regions. Reach out to us today and let us leverage our expertise and care to guide you through the legal process.

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