Changes in Beneficiaries
Terms:Pretermitted spouse (or child): Class gift: Rule of convenience: Uniform Simultaneous Death Act (“USDA”): |
Depending on when the testator writes his or her will, it can become obsolete or outdated over time. Beneficiaries die or new potential beneficiaries are born. Furthermore, the testator may just change his or her mind as to who should inherit the estate. As such, it is important to periodically review the will to make sure it still reflects the testator’s wishes.
Describe the beneficiary
Earlier in this chapter we covered how ambiguous language in the will can impact carrying out the testator’s wishes, especially if extrinsic evidence is not admissible to resolve these uncertainties. Accordingly, care should be taken to accurately describe individual beneficiaries by full name (including middle initial, if any) and their relationship to the testator.
This is particularly important if the beneficiary has a common name, such as John Smith. For example, specifying John Carter Smith or at the very least John C. Smith will eliminate many other possibilities.
It would also be helpful to include the beneficiary’s city and state of residence for further identification. Although people move often, at least that last known city would be in the beneficiary’s address history.
Change in marital status
When the testator originally prepared his or her will, the person might have been single, thereby making disposition of his or her assets fairly simple. Upon marriage, ideally the testator should revise the will, thereby providing for the spouse. Even if the testator does not modify a premarital will, there are protections in place to provide for the new spouse.
As with other topics related to wills, states differ as to how marriage affects a previously executed will. In about half the states, marriage by itself has no impact. Perhaps this is because the spouse has statutory protection via elective share statutes or community property laws, both covered in earlier chapters.
In the other half of states, they have specific statutes that address the testator’s subsequent marriage. In most of these states, the will is only partially revoked, but only to the extent of providing the new spouse with an intestate share. These are sometimes called “pretermitted spouse” statutes. In lieu of providing for the spouse in the will, the testator also has the option of creating an instrument outside the will that has the same function.
EXAMPLE: Russell Shannon executed his will in 1974, naming his daughter sole beneficiary and executrix. Russell married in 1986 and died in 1988, having made no changes in his will, which was admitted to probate. Russell’s wife, Lila, petitioned the probate court to determine her status as an heir. The issue before the court was whether Lila was a pretermitted spouse. The court held that Lila was entitled to a share of the estate for the following reasons: the relevant statute in her state provided a share to the surviving spouse who married the testator after he executed a will, the exclusion did not appear to be intentional, there was no evidence that Russell had provided for his wife outside the will, and Lila did not execute an agreement to waive her rights to a share of the estate. See, e.g., Estate of Shannon, 224 Cal. App. 3d 1148 (1990) .
In addition, today, one out of every two marriages ends in divorce, and the rate continues to climb. As such, when preparing an estate plan, one should contemplate how a second or subsequent marriage will affect those plans. Later in this chapter we will cover the ramifications of divorce on the will.
Pretermitted children/minors
As previously discussed, pretermitted child statutes are designed to protect children who may have been accidentally omitted from the will. Despite the universal existence of this type of statute, states still interpret them differently. For example, in most states, the statute operates only in favor of children born or adopted after the will’s execution. See, e.g.,
EXAMPLE: Joanne has a child, Haley, at the time she executes a will that bequeaths her estate one-third to her husband, Michael, and two-thirds to her sister, Isabel. The will makes no mention of Haley or of any future children that Joanne might have. Yet, there is no evidence that Joanne’s omission of Haley was intentional. Two years later, Joanne and Michael have another child, Françoise. Joanne dies without having modified her old will. Françoise takes a share of Joanne’s estate as a pretermitted child. However, Haley takes nothing because he was alive at the time the will was executed. As such, Joanne had ample opportunity to make provisions for him.
Conversely, in other jurisdictions, the pretermitted child statute applies to both categories of offspring—those alive when the will was executed and after-born and after-adopted children. See, e.g.,
EXAMPLE: Joanne has a child, Haley, at the time she executes a will that bequeaths her estate one-third to her husband, Michael, and two-thirds to her sister, Isabel. The will makes no mention of Haley or of any future children that Joanne might have. Yet, there is no evidence that Joanne’s omission of Haley was intentional. Two years later, Joanne and Michel have another child, Françoise. Joanne dies without having modified her old will. In these jurisdictions, both Haley and Françoise would take a share of Joanne’s estate. To defeat the statute’s operation, Joanne would need to specifically address her intentions toward the children (i.e., to disinherit them) in her will.
In gathering sufficient assets to give the pretermitted child his or her share, the rules of abatement apply. Some jurisdictions use “full” abatement regarding a pretermitted child. In other words, the child’s share comes first out of intestate property, then comes the residuary estate, etc (in accordance with the rules of abatement discussed earlier). Some jurisdictions apply only a pro rata abatement for the child’s share. Under pro rata abatement, the pretermitted child’s share does not bear the full brunt of the expense. Rather, all testamentary gifts abate proportionately.
EXAMPLE: Karen bequeaths $90,000 to each of her children, Rosa and Elvis, and leaves her residuary estate to her sister, Mavis. Thereafter, she adopts a child, Hiroshi. Karen never changes her will before she dies several years later, with a total of $180,000 in her estate. In jurisdictions that follow pro rata abatement, the gifts to Rosa and Elvis will be reduced to allow Hiroshi to receive a share of the estate. So, each child will receive $60,000.
Intentional omission
Testators are free to omit bequests to their children and a number of statutes provide that a child who is born or adopted after the will is executed is not protected from disinheritance if it appears that the omission was intentional.
In order to effectively carry out this wish, the decedent’s intention to omit the child must appear on the face of the will; extrinsic evidence is not admissible to assist with this determination. See, e.g.,
Class gift
Rather than give a gift to a specific person, the testator instead can give a gift to a group of beneficiaries. This type of bequest is known as a class gift. Common classes are “children”, “grandchildren” or “brothers and sisters.” Despite the seemingly obvious classification of the group, disputes can still arise as to who should actually be included in the designated class.
“Children” can have different meanings. Specifically excluded, though, are grandchildren, unless the will explicitly uses children to actually mean “descendants.” See, e.g.,
The term children ordinarily includes children from all marriages, not just the children from the current marriage. In addition, adopted children would be included in this definition. See, e.g.,
EXAMPLE: As a teenager, Theresa had a child, Phyllis, born out of wedlock. Phyllis was adopted by a new, unrelated family. Subsequently, Theresa marries and has a son, Blake, in that marriage. In the meantime, Theresa’s grandfather established a trust: income to Theresa for life, remainder to her “issue.” Whether her whereabouts are known or not, at Theresa’s death, Phyllis would not be included in the class gift to Theresa’s issue and would not take a share of the remainder. Rather, only Blake would qualify to receive the remainder, as the sole member to the class. See, e.g., Newman v. Wells Fargo Bank, 14 Cal. 4th 126 (1996) ; In re Estate of Best, 66 N.Y.2d 151 (1985) .
Nonmarital children are treated similarly in how they inherit property under the intestacy statutes previously discussed. Very few states totally exclude nonmarital children from a class gift to someone’s “children,” unless the testator specifically intended to omit them. Rather, most states presumptively include nonmarital children in the class of children. See, e.g.,
EXAMPLE: As a teenager, Theresa had a child, Phyllis, born out of wedlock. Theresa decided to keep Phyllis and spent many years as a single mother. Subsequently, Theresa marries and has a son, Blake, in that marriage. In the meantime, Theresa’s grandfather established a trust: income to Theresa for life, remainder to her “issue.” At Theresa’s death, both Phyllis and Blake would be included in the class gift to Theresa’s issue and would take equal shares of the remainder because nonmarital children are not excluded from the class gift to issue.
However, care must be taken if the class is qualified with the phrase “lawful issue,” since that additional language limits the class to legitimate offspring only, and does not include nonmarital children or descendants. See, e.g.,
EXAMPLE: As a teenager, Theresa had a child, Phyllis, born out of wedlock. Theresa decided to keep Phyllis and spent many years as a single mother. Subsequently, Theresa marries and has a son, Blake, in that marriage. In the meantime, Theresa’s grandfather established a trust: income to Theresa for life, remainder to her “lawful issue.” At Theresa’s death, Phyllis would not be included in the class gift to Theresa’s issue and would not take a share of the remainder because she was born out of wedlock and not a “lawful issue.” Rather, only Blake would qualify to receive the remainder, as the sole member to the class.
Since “issue” and “descendants” are often used interchangeably, a gift to one’s issue presumptively includes lineal descendants of any degree (children, grandchildren, etc.).
These terms also include adopted and nonmarital children. Regarding division of shares, the same system applies as discussed in the chapter on intestacy statutes—distribution per capita or per stirpes.
As a reminder, in a per capita distribution, each descendant takes an equal share of the assets.
EXAMPLE: Anne executes a will that devises her farm in Montana to her descendants, to share equally. At the time the will was executed, all four grandchildren, Lauren, Michael, Nola and Odette were still alive. However, Odette predeceased Anne. Under a per capita distribution, each party will receive 1/5th of the estate, since there are five of them.
In a per stirpes distribution, each descendant takes a share of the assets by right of representation. In other words, a descendant’s share is determined by the share that person’s ancestor would have been entitled to.
EXAMPLE: Anne executes a will that devises her farm in Montana to her descendants, to share equally. At the time the will was executed, all four grandchildren, Lauren, Michael, Nola and Odette were still alive. However, Odette predeceased Anne. Under a per stirpes distribution, we first look at what share the generation with living relatives would be entitled to, namely the grandchildren Lauren, Michael, Nola and Odette. If they were all still living, each would have been entitled to 1/4th of the estate, since there are four of them. Only Lauren, Michael and Nola are still entitled to their 1/4th share. However, since grandchild Odette is deceased, his issue, Xavier and Yvonne, would take Odette’s share (1/4th) and split it 50/50. So, both Xavier and Yvonne would each be entitled to 1/8th (1/4th * ½) of the estate.
If the will uses the term “heirs,” courts have interpreted this term to mean those persons who would take the person’s estate if he or she had died intestate. Generally, the intestate statute at the time of the testator’s death is the one that applies. Moreover, the use of heirs presumptively includes the person’s spouse, a key inheritor under most intestacy succession rules. See, e.g.,
“Brothers and sisters” include half and whole siblings, unless the will states otherwise. “Cousins” stops at first cousins (i.e., children of aunts and uncles). “Nieces and nephews” presumptively refer to children of brothers and sisters, but not nieces and nephews of one’s spouse. One group totally excluded is the vague term “friends.” As such, any gift to a “friend” is void for vagueness because it is difficult to clearly identify who the intended beneficiary is. In addition, extrinsic evidence is not admissible to show whom the testator intended to include within the term “friends.”
At some point, there has to be a determination as to who is a member of the class. To facilitate this identification, the “rule of convenience” was created. Under this rule, the class closes (later-born class members are excluded from sharing the gift) when a class member is entitled to a distribution of his share of the gift. For outright gifts, the class closes upon the testator’s death.
EXAMPLE: Farrah executes a will that devises her Hollywood Hills estate “to the children of my sister, Anastasia.” At the time the will is executed, Anastasia has one child, Quincy. Between the time of the will’s execution and Farrah’s death, Anastasia has two more children, Alexander and Sheldon. Five years after Farrah’s death, Anastasia has another child, Dexter. In determining which children are included in the class, at the time of Farrah’s death, Anastasia had three children, Quincy, Alexander and Sheldon. Since Dexter was born after Farrah’s death, he is not entitled to a share of the estate. Plus, it would be inconvenient to wait until Anastasia dies as the final cutoff point to her having additional children.
Beneficiary predeceases testator
A state’s anti-lapse statute may apply to a class gift. Specifically, if the class member who predeceases the testator is within a close enough relation to the testator and he or she leaves descendants who survive the testator, these individuals can be substituted instead of the class gift rule applying (surviving class members take). See, e.g.,
EXAMPLE: Josephine’s will devises her residence in Idaho “to the children of my daughter, Suzanne.” At the time the will was executed, Suzanne had three children: Chelsea, Bambi and Carlisle. Bambi predeceased Josephine, leaving two children: Tuesday and May. When Josephine dies, Chelsea and Carlisle take one-third each of the residence. Pursuant to the anti-lapse statute, Tuesday and May take Bambi’s one-third share and split it evenly. They each end up with one-sixth of the residence.
Some states do not apply the anti-lapse dictates to class gifts. Instead, the surviving members of the class are the only ones entitled to a share of the property because there was no lapse if there are still beneficiaries alive to take the property. See, e.g.,
EXAMPLE: Josephine’s will devises her residence in Idaho “to the children of my daughter, Suzanne.” At the time the will was executed, Suzanne had three children: Chelsea, Bambi and Carlisle. Bambi predeceased Josephine, leaving two children: Tuesday and May. When Josephine dies, Chelsea and Carlisle take one-half each of the residence, as the remaining members of the class. Since the anti-lapse statute does not apply, Tuesday and May are not entitled to any of the property.
Uniform Simultaneous Death Act
On occasion, the beneficiary may die at the same time as the testator or in close succession. To address the uncertainty surrounding who may have died first, many jurisdictions have enacted the Uniform Simultaneous Death Act (“USDA”). According to the USDA, when two people die under circumstances that make it impossible to determine who survived the other, the property is distributed as though the testator survived the beneficiary, unless the will specifies otherwise. The result—the gift lapses.