When a beneficiary dies before the person who made the will or trust, the estate plan may not work as intended. The law may direct those assets to other recipients, depending on the circumstances. Knowing these rules can help keep an estate plan aligned with the intended wishes.
Why naming a contingent beneficiary matters
Naming a contingent beneficiary for each primary beneficiary helps ensure that someone receives that share of the estate. If a primary beneficiary dies first, the contingent beneficiary receives that share instead. This can prevent assets from passing under default inheritance rules that may not match the estate plan. Many people name children as primary beneficiaries and grandchildren as contingent beneficiaries. Others may choose siblings, charities or trusted friends based on their circumstances.
What happens without a contingent beneficiary?
What happens next depends on how your will is written and whether New York’s anti-lapse statute applies. Under EPTL § 3-3.3, if a predeceased beneficiary was a qualifying family member who left surviving descendants, the gift may pass to those descendants rather than lapsing. If anti-lapse protections do not apply, the gift may fall into the residuary estate or pass under intestacy rules. New York’s intestacy statute prioritizes spouses and children, but the outcome may differ significantly from your original intent.
Some wills include per stripe language, which directs a deceased beneficiary’s share to that person’s surviving descendants. If the beneficiary’s child also predeceased, the share passes to grandchildren or further descendants. This approach applies only if the beneficiary left at least one surviving descendant.
When to review and update your beneficiary designations
Major life events signal the need to review your estate plan, including:
- Marriage or divorce
- Birth or adoption of a child or grandchild
- Death of a named beneficiary
- Significant change in financial circumstances
Estate planning attorneys generally recommend reviewing all designations every three to five years, even without major life changes.
The following accounts require separate beneficiary designations outside your will:
- Retirement accounts such as IRAs and 401(k)s
- Life insurance policies
- Payable-on-death bank accounts
- Transfer-on-death investment accounts
Courts generally honor the most recent valid designation on file. Keeping those records current is an essential part of maintaining your estate plan.
Why regular reviews matter for your estate plan
Beneficiary planning should change as family and financial needs change. Wills, trusts and account forms should stay up to date. An estate planning attorney can help name backup beneficiaries and keep all designations in sync. This can help prevent gaps that may leave state law to decide who receives the assets.