Death of a Beneficiary during the testator's lifetime

Question 1

How does the anti-lapse statute work?

Answer 1

Rule of thumb: A testator cannot make a gift to a dead person.

General Rule: If a beneficiary dies during the testator’s lifetime, the gift to the beneficiary lapses (fails) UNLESS the gift is saved by the anti-lapse statute.

Anti-Lapse: The gift does not lapse but vests in the deceased beneficiary’s issue if BOTH of the following are satisfied:

1. The predeceased beneficiary was testator’s issue, brother, or sister; AND
2. This predeceased beneficiary leaves issue who survive the testator

NOTE: Disclaimer is treated as predeceased, so anti-lapse applies!

Question 2

Does the anti-lapse statute apply to disclaimer?

Answer 2

Yes, totally.

Question 3

Does the anti-lapse statute protect a child that was adopted out of the family?

Answer 3

YES.

This is a recent NY court of appeals case.

Rule: If a parent of an child that was later adopted out makes a testamentary gift to that child, the anti-lapse statute DOES protect the child even though the general rule would be that adopted out children have no inheritance rights from birth parents.

Question 4

What is the surviving residuary beneficiaries rule?

Answer 4

Very specific.

Scenario: Absent a contrary provision in the will, if the testator’s residuary estate is:

1. Devised to two or more persons
2. The gift made to one of them fails or lapses for any reason; AND
3. The anti-lapse statute does not apply, THEN

The other residuary beneficiaries takes the entire residuary estate in proportion to their interests.

I.e., the residuary is split between them, it does not go to intestacy. Note a new party can take the place of someone under anti-lapse.