In making your Will or Trust, you must plan for the unthinkable: What should happen if a beneficiary died before you? If that happened, you could say the beneficiary's gift is cancelled and the gifts to other surviving beneficiaries are increased proportionately. Or, you could say the gift should go to the deceased beneficiary's descendants. If you want the gift to go to descendants, you also must think about how the gift should be divided among the descendants. Let's say you had two children, Dick and Jane, who both died before you. Dick left one surviving child, Sally (your grandchild). Jane had three children, Tom, Henry and Julie, but of the three, only Tom (your grandchild) is still living. Jane's other son Henry also died before you, leaving one child, Henrietta (your great-grandchild). Jane's third child, Julie also died before you leaving two children, Julien and Julietta (your great-grandchildren). There are several ways your estate might be divided among your grandchildren and great-grandchildren, depending on your wishes.
If you direct the gift be divided "by representation" or "per stirpes," then Sally will receive all of her father Dick's half. Tom will receive one-third of his mother Jane's half (1/6). Henrietta will receive her father Henry's one-third of Jane's half (1/6), and Julien and Julietta will divide their mother Julie's one-third of Jane's half (1/12 to each). This is the division most people intend.
Alternatively, you could direct the gift be divided "per capita." In our example, Sally and Tom as the two survivors of their generation will each receive 1/4 and Henrietta, Julien and Julietta will each receive 1/6. This is the least likely to be anyone's intent.
If you don't direct how the gift should be divided, the division will be the same as if there was no Will. Under intestate succession, Sally, Tom and Henrietta will each receive 1/4, and Julien and Julietta will each receive 1/8. You can see the distinction, and how important it is to plan for the worst-case scenario that a beneficiary might die before you do.
Planning Ahead Column:
By Lisa Alexander, Esq.
Jakle & Alexander, LLP,
1250 Sixth Street, Suite 300, Santa Monica, CA 90401
Main Line: 310-395-6555