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Monday, August 26, 2013

What happens to the share of someone who dies before receiving her inheritance?

What happens to the share of a beneficiary who is alive when the testator dies, but passes away before her share is paid to her? Who gets her share? Amazingly, executors with no training in the law seem to be willing to toss a coin on this question based on language and issues they really don't understand. Hopefully the question, asked by a reader, and my answer, will clarify this situation for anyone who is currently in a similar situation:

"My Uncle left inheritance to me and other family members plus my mother. My mother passed away recently and the will states that the inheritance should be divided between two of us only in the event of her death. However one of my brothers is saying that in this case ( Mum passed away after the will was read) than the estate inherits. Putting the morality issue (i.e.  respecting the wishes of my Uncle) can the executor pass the funds onto my brother for my Mum's estate?"
The fact that the will was "read" has nothing to do with anything. That word has no legal meaning. Forget that idea.
There are two factors that are relevant to the question of who inherits your mother's share. The first is whether your mother was alive when your uncle died.
The second is any clause that defines a survivorship period. For example, most wills say (or certainly should say) something like "any beneficiary who fails to survive me by 30 days is deemed to have predeceased me", or "X will receive a share of my estate if she survives me by 30 days".
So, if the will says that your mother receives a share of the estate, then she inherits it when your uncle died. The fact that she passed away before the money or property was actually given to her does not negate her legal right to inherit. The share that your mother would have received should be paid to her estate and divided according to her will (or intestacy law if she had no will).
This means that the executor of your uncle's estate should pay the money to the executor of your mother's estate. Your uncle's executor is not in charge of your mother's estate (unless she made a will appointing him too) so your uncle's executor should not be dividing up the money among beneficiaries. If your mother's will was not probated, it might have to be done now.
The clause in your uncle's will that says your mother's share would go to you and the other beneficiary would only apply if your mother died before your uncle died (or within the specified survivorship period).
I take it that the uncle's executor isn't using a lawyer. This is pretty simple estate law that could be answered by a lawyer very quickly (in fact it just was) so it's too bad that it has caused so much confusion and discussion. I guess he thinks it's cheaper to do the estate without a lawyer, but it won't be cheaper if he's sued for paying the estate to the wrong people!

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