When you make an estate plan, one of the most important decisions you have to make is who your beneficiaries will be. The goal of creating an estate is to ensure your assets and worldly goods go to the people you want. One thing you need to think about, however, is what will happen to your assets if your chosen beneficiary passes away. Here are some things to think about:
Who Can Be a Beneficiary?
A beneficiary is a person, company, non-profit organization, or any other entity you leave your assets to once you pass away. A beneficiary is an important part of an estate plan since the beneficiary is the reason for estate planning in the first place.
What Happens If the Beneficiary Passes Away?
If the person or entity you leave your estate to passes away, you can amend your estate plan to declare a new beneficiary. However, you can prevent this extra step in your estate planning by making sure the estate plan includes a secondary beneficiary or some wording on what happens if your primary beneficiary passes away.
There are some things to think about if changes have to be made to your will due to the passing of your beneficiary. One thing you can do is to state that the inheritance lapses if the beneficiary passes away. This means that if the beneficiary dies, their inheritance will no longer go to them. For instance, if you have two children and one of them passes away before they can receive your inheritance, that child's inheritance will lapse, and the other child will receive 100 percent of the estate instead of 50 percent.
You can also set up your estate so that the children of the beneficiary will receive their portion of your estate if the beneficiary passes away. If the beneficiary has no children or dependents, the inheritance will again lapse and go to the next beneficiary in your estate plan.
Planning your will and estate is an important job that everyone needs to think about no matter how large their assets may be. You need a good attorney to help you set up your estate plan with all contingencies in place to ensure your assets go where you want them upon your death. Always make sure the wording in your estate plan ensures your assets go to those you want so there are no surprises after you pass away.
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