Often times when a person makes a will they are just thinking, naturally, of what happens on their own death. However, when making a will, it is always advisable to think about what happens if a person dies before you. The law states that if a person dies before you, the intended gift goes to those that were getting the balance of the estate. In a will, you leave certain assets to certain individuals. Then, you will have a final catch all clause in your will that captures any assets that might not have been mentioned previously. We call this a “residue” clause. That is because it deals with the residue or balance of your estate. If a person dies before lawyers say that the benefit falls into the residue. There is one exception to this. If the person that dies before you, is a child, and that child has children when you die, then, the gift to that child does not fall into the residue but rather goes to the estate of that child.
We give an example
Sean makes his will where he leaves his house to his daughter Mary. Mary dies before Sean, but at the time of Mary’s death she had three children. Sean then dies. Mary’s children are still alive. In this case, the bequest of the house does not fall into the residue but passes to Mary’s estate. If Mary made a will, then the house from Sean is treated as if Mary owned it when she died and it will pass in accordance with the terms of her will.
When a beneficiary dies before a person who made the will, we say that their gift lapses. The consequences that we mentioned above then occur, but there are ways to tailor your will to deal with this. We call this drafting a gift over clause and it will be the subject of next weeks blog.