What is a lapsed beneficiary?

A lapsed beneficiary is someone named in a will or trust who has died before the creator of the will or trust and before the will or trust has been executed. In Indiana, if a beneficiary lapses, their share of the estate or trust goes to the remaining beneficiaries according to Indiana Probate Law. For example, if someone named three beneficiaries in their will and one of them passed away before the will was executed, the remaining two beneficiaries would receive the deceased beneficiary’s share. Typically, a surviving spouse of a lapsed beneficiary is still able to receive a portion of the deceased’s share if the decedent had children. This is referred to as a “life estate” or an “inheritance trust”. Indiana Probate Law also states that if a lapsed beneficiary had children who are the descendants of the decedent, then their children can receive the lapsed beneficiary’s share. It is important to note that if the lapse beneficiary was the sole heir, then the property or estate will become the property of the decedent’s estate. This is an important aspect of Indiana Probate Law that should not be overlooked when planning an estate.

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