Estate plans are crucial to protecting loved ones and ensuring peace of mind. Despite thorough planning, unexpected events can happen that may change the disposition of a person’s assets. An experienced Texas estate planning attorney can work with individuals to plan for the unexpected.
What is a Beneficiary under Texas Law?
Broadly, a beneficiary is any individual who gains an advantage or profits from something. In the context of a Texas estate plan, beneficiaries refer to the individual who stands to inherit a decedent’s assets. The creator of an estate (Testator) typically designates these individuals through a will or trust.
Comprehensive estate plans often include primary beneficiaries and contingent beneficiaries. Additionally, beneficiaries do not have to be individuals or categories of individuals, such as grandchildren. The law permits testators to include organizations, such as non-profits, as beneficiaries. Primary beneficiaries are the first individual or organizations to inherit assets under the will. In contrast, contingent beneficiaries are those who are “second in line” to the primary beneficiary. Contingent beneficiaries only inherit assets in cases where the primary beneficiary cannot, for instance, if the primary beneficiary predeceases the Testator.
What Happens if a Primary Beneficiary Predeceases Testator?
Sometimes, a primary beneficiary to a will may die before the Testator. In these cases, the language of the will or trust will control the distribution of a person’s assets. Those with a comprehensive estate plan will often list contingent beneficiaries. However, Texas’ anti-lapse statute governs situations where a testator neglected to include contingent beneficiaries.
Texas Anti-Lapse Statute
A residuary estate is a probate term that refers to the assets in a testator’s estate that remain after the disposition of gifts and resolution of all debts, taxes, and probate fees.
Texas’ anti-lapse statute, §251.151-251.153 of the Texas Estates Code, protects a gift from passing intestate (e.g., as if there is no will). The general rule is that if a beneficiary is a descendant of the Testator or the Testator’s parents, the gift goes to the beneficiary’s decedents. On the other hand, if the beneficiary is not the Testator’s descendent, the gift lapses and goes to the person named as the residuary beneficiary. Currently, if a residuary estate is gifted to two or more individuals and one of those people predeceases the Testator, the predeceased’s share passes to the surviving beneficiaries of the residuary.
In most cases, if a gift fails or lapses, it becomes part of the Testator’s residuary estate. However, if the Testator failed to include a residuary clause or if the residuary beneficiary predeceases the Testator or is not a descendent of the Testator or the Testator’s parents, the gift passes in accordance with intestacy laws.
Contact a Texas Estate Planning Attorney for Assistance with Your Will
It is imperative that individuals consult with an experienced attorney when creating their estate plans. Texas case law is rife with examples where courts are left to interpret seemingly ambiguous language. The Houston estate planning attorneys at McCulloch & Miller have extensive experience drafting comprehensive and legally binding estate planning documents. In addition to creating Texas estate plans, our attorneys assist in other matters such as asset protection for professionals and business owners, Medicaid applications, pension benefits for Texas veterans, and special needs planning. Contact our office at 713-597-7176 to schedule a free initial consultation with an attorney on our team.