Beneficiary Issues Flashcards
LAPSE
What is lapse and what is the purpose of NY’s anti-lapse statute?
HIGHLY TESTED MATERIAL
LAPSE = where a gift fails (revoked by operation of law) because the beneficiary fails to survive the testator or is treated as if not surviving such as because beneficiary
disclaimed the property
Unless the will provides otherwise, a BENEFICIARY MUST OUTLIVE the TESTATOR by 120 HOURS to receive property under the will
If there is insufficient CLEAR AND CONVINCING EVIDENCE that the beneficiary survived by this time period, the beneficiary is treated as if the beneficiary predeceased the testator
HOW LAPSE CAN BE AVOIDED:
1) Gift is SAVED by an ANTI-LAPSE STATUTE
2) The testator may shorten (very rare) or lengthen (very common) the default survival period
NY ANTI-LAPSE STATUTE
What are the 2 reqs for the application of NY’s anti-lapse statute?
HIGHLY TESTED MATERIAL
In NY, a gift does NOT lapse, but VESTS in the deceased beneficiary’s ISSUE IF:
1) the predeceased beneficiary was the testator’s ISSUE (i.e. child, grandchild, etc.) or NATURAL SIBLING (i.e. brother/sister); AND
2) the predeceased beneficiary LEAVES an ISSUE that survives the testator
NOTE: Anti-lapse WILL NOT BE APPLIED if a condition precedent(i.e. “if he survives me”) is used in the will
NOTE: Does not apply to the case of other predeceased relatives such as nieces and nephews, uncles and aunts, cousins, etc.
If “adopted-out” childis SPECIFICALLY listed as a beneficiary in Will →adopted-out child’s issue can take under anti-lapse statute REMEMBER: normally adopted out children have NO inheritance rights from the birth parents OR family
DOES NOT APPLY TO SPOUSE (even if the predeceased beneficiary leaves a will giving everything to that spouse!)
DISCLAIMER and an ANTI-LAPSE INHERITANCE UNDER A DISCLAIMER
What is the effect if a beneficiary “disclaims” a gift?
HIGHLY TESTED MATERIAL
Same as w/ intestacy→ a disclaimant is CONSIDERED to have PREDECEASED the testator
NY’s anti-lapse statute applies IF
(i) the disclaimant is an ISSUE or SIBLING of the testator; AND
(ii) the disclaimer leaves a surviving ISSUE→ gift goes to issue
Partial Lapse in the Residual Clause
What is the Surviving Residuary Beneficiary Rule?
HIGHLY TESTED MATERIAL
Absent a CONTRARY provision in the will, if the testator’s residuary estate is:
(i) devised to 2 or more persons
(ii) and the gift to one of them fails/lapses
(iii) and anti-lapse does NOT apply
→ then OTHER residuary beneficiaries take the ENTIRE residuary estate, in proportion to their interest in the residue
NOTE: if anti-lapse statute APPLIES, then the gift passes to the ISSUEof the predeceased divisee
IMPORTANT!!!! – DO NOT APPLY THIS RULE TO NON-RESIDUARY GIFTS!!!!!
What is the rule re: gifts to a “generic class”, which has a predeceased member?
HIGHLY TESTED MATERIAL
Absent a contrary prvn in the Will….
If the Will makes a gift to a group of persons as a “generic” class (i.e. gift to “children”, “siblings”, etc)
AND
some members of that group PREDECEASE the testator
→ the SURVIVING class members TAKE in equal share
BUT, IF NY’s anti-lapse statute applies (i.e. class member is ISSUE or SIBLING of testator AND leaves a surviving issue) → the share GOES to the predeceased member’s ISSUE
NOTE: if the gift was “INDIVIDUALLY” named (i.e. not as a class), then the lapsing share will go to the RESIDUARY (unless anti-lapse applies)
What 2 groups CANNOT take part of a class gift?
The 2 groups are... 1) "Adopted-out" children: if a class gift is to "children", ANY adopted out children DO NOT take as part of the "class" (REMEMBER: adopted out children have NO inhereitance rights from birth parents OR birth family) BUT, the adopted-out child WOULD take as a class member in the adopting family
2) Later-born class members (after testator OR life tenant dies) are NOT a part of the “class”
(i. e. the Rule of Convenience)
BUT, children in GESTATION at time of testator’s or life tenant’s death ARE class members (Womb Rule)
What is the rule when a testator AND a beneficiary die simultaneously?
Revised Uniform Simultaneous Death Act (RUSDA)
Absent a Will prvn to the contrary…
If a BENEFICIARY and testator die simulatenously (or almost simultaneously) AND there is insufficient CLEAR AND CONVICING evidence to prove the beneficiary has SURVIVED the testator by MORE THAN 120 HRS (5 DAYS)→ PRESUME that the BENEFICIARY has PREDECEASED the testator
IF (assumed) predeceased beneficiary is an ISSUE or SIBLING of the testator, then NY’s anti-lapse statute applies (assuming the predeceased beneficiary has left a surviving issue)
What is the rule for distributing jointly-held property when both joint tenants die simultaneously?
Revised Uniform Simultaneous Death Act (RUSDA)
Assuming both dies w/in 120hrs (5 days)…
STEP 1: RUSDA theoretically SEVERS the right of survivorship in the joint property, rendering it a tenancy in common
STEP 2: Property of a SPECIFIC co-owner passes as though HE survived the OTHER co-owner, so the property would go to HIS issue
NOTE: the distribution would be the SAME for tenants by the entirety and joint bank accounts
E.g.H & W die simultaneously & JT w/ right of survivorship. H has 2 children, A & B, from a previous marriage, & a child w/ W. TIC - A, B, & C each take 1/3 of H’s half and then C takes W’s half.
MARRIAGE AFTER WILL IS EXECUTED
What is the effect on a Will if the testator marries after Will is executed?
Marriage AFTER the execution of a Will has NO effect on the validity of the Will, BUT it MAY affect gifts and dispositions under the Will
NY law provides for a “right of election” so that a testator CANNOT disinherit his spouse
DIVORCE, ANNULMENT, AND SEPARATION
What is the effect on a Will if the testator “unmarries” after Will is executed?
HIGHLY TESTED MATERIAL
RULE = If:
(i) a ct renders a FINAL decree (i.e. NOT in process)
(ii) of DIVORCE, ANNULMENT, or SEPARATION (i.e. NOT an agmt)
(iii) AFTER the execution of a Will,
THEN ALL gifts and fiduciary appointments in favor of the former spouse are REVOKED by operation of law
EFFECT =
read the Will as if the former spouse has PREDECEASED the testator
property that WOULD have passed by operation of law are OVERRULED (i.e. a former spouse couldn’t take an insurance benefit EVEN IF named on the docs)
NOTE: NY’s anti-laspe statute does NOT apply b/c a spouse is NOT an issue or a sibling
Exceptions
a. Gifts to ex-Stepchildren
All gifts and fiduciary appointments in favor of the ISSUE of the former spouse are NOT revoked
b. Appoint as Guardian of Mutual Children
An appointment of the former spouse as GUARDIAN of the couple’s children is NOT affected
c. Remarriage
If the couple RECONCILES and REMARRIES, ALL prvns in favor of the “former” spouse are RESTORED
What is the effect of pretermitted children on a Will?
HIGHLY TESTED MATERIAL
1) If the testator has ONE OR MORE children when the Will was executed; AND…
1) there is NO provision made for ANY child → the pretermitted child INHERITS NOTHING
2) the Will made gifts to the other children→ the pretrmitted child SHARES the amt w/ the other children AS IF a CLASS gift was made
The pretermitted child takes from “the other children proportionately, not equally”
3) it appears that the testator’s INTENTION was to ONLY make a “ltd provision” to the children living at the time the Will was executed→ the pretermitted child takes his INTESTATE share (which will come from other beneficiaries proportionately)
4If the testator had NO CHILDREN when the Will was executed→ the afterborn child takes his INTESTATE share
Potential to Receive a Forced Share
When does the EPTL protect pretermitted children?
HIGHLY TESTED MATERIAL
“Pretermitted children” = children born OR adopted AFTER the Will is executed
Rule = the EPTL ONLY protects pretermitted children who are…
- NOT provided for by any settlement; AND
- NEITHER provided for NOR mentioned in the Will
Circumstances Providing NO PROTECTION for Pretermitted Child…
IF the pretermitted child is
1) provided for by a settlement, or
2 provided for or mentioned in the will
THEN NO FORCED SHARE FOR PRETERMITTED CHILD
IF FORCED SHARE TESTATOR HAD ONE OR MORE CHILDREN WHEN WILL WAS EXECUTED….
1) IF will had NO PROVISION for ANY children then → The pretermitted child receives nothing and is thus on equal grounds with the other children
2) If there WAS A PROVISION for one or more children then → The The pretermitted child shares in the gifts to the other children as if a class gift were made
3) If If it appears that the testator’s intention was to make ONLY A LIMITED OR NOMINAL PROVISION for children living at the time the will was executed, the pretermitted
child receives an intestate share
IF FORCED SHARE TESTATOR HAD NO CHILDREN WHEN WILL WAS EXECUTED….
the pretermitted child receives an intestate share
NOTE: Source of Forced Share
Look first to PROPERTY PASSING by INTESTACY, then, all OTHER BENEFICIARIES share PRO RATA unless doing so would defeat the obvious intention of Testator as stated in the will
Distribution of Lapsed Gifts — Generally
HIGHLY TESTED MATERIAL
ORDER OF DISTRIBUTIONS FOR LAPSED GIFTS
A lapsed gift will be distributed in order of the following:
FIRST —
Under Express Terms Of Will
If the will indicates where the property is to go if a beneficiary predeceased the testator, such instructions will be carried out.
SECOND —
Gift Saved by the Anti-Lapse Statute
THIRD —
Via Residuary Clause
If the testator failed to make provision for lapse and gift not saved by the anti-lapse statute, lapsed gifts pass under the residuary clause.
FOURTH —
Via Intestacy
If the testator failed to make provision for lapse, the anti-lapse statute does not save the gift, the will lacks a residuary clause, or if the lapsed gift is the residuary clause, the lapsed gifts pass via intestacy.
