Crisis Planning at its Finest..
There’s nothing like a good old-fashioned pandemic scare to bring up the specter of entire family units perishing at the same time.
If this idea is keeping you awake at night, then you need to take a moment and map out what would happen to your estate in the event of a catastrophe. Review your will, trust, and the beneficiary designations on life insurance, financial accounts and other assets. It may be time to change a few things.
Here’s a few tidbits about the law in Texas.
For wills, the default survival period in Texas is 120 hours. A beneficiary must outlive you by at least 120 hours in order to inherit under your will. You can change the length of the survival period by specifically addressing it in your will. Many wills provide for a 30- day survival period.
If a beneficiary in your will does not outlive you past the survival period, then that beneficiary is considered to have predeceased you.
A lot of wills include wording about what happens if a beneficiary predeceases. For those wills that don’t, Texas has an “anti-lapse” statute. Under the statute, if the predeceased beneficiary was your descendant or a descendant of your parent, then that beneficiary’s share goes to his or her descendants. Let’s say that your will leaves your house to your sister Emily and your brother Al. If Emily predeceases you, then her share of the house goes to her children in equal shares. The anti-lapse statute applies because Emily is a descendant of your parent.
However, the anti-lapse statute does not apply to a class gift. If instead of specifically naming Emily and Al your will provides that the house was left to “my siblings,” we have a completely different result because the word “siblings” is considered a class. If Emily predeceases you, then Emily’s share would go to Al, the remaining member of the class.
The anti-lapse statute also does not apply to a bequest made to your spouse, a living trust, a life insurance policy designation or a financial account designation.
You can change the effect of the anti-lapse statute by the wording in your will.
What happens if all of the beneficiaries named in your will predecease you and the anti-lapse statute does not apply? Hopefully, your will has a clause that addresses that. This is known as the residuary clause. If there is no residuary clause, then the court will determine your heirs and the relative percentages they would receive out of your estate as if you died without a will.
If you have no heirs, or 7 years pass without anyone asserting a lawful claim or ownership to your property, then your estate will “escheat” to the state.
So there is a scenario where Texas really could end up with your stuff.
What should you do now? Review your will. It should include beneficiary and contingent beneficiary designations, a definition for the survival period, a lapse of bequest provision and a residuary clause.
This article does not constitute legal advice.
Virginia Hammerle will be a speaker at the City of Lewisville Senior Health Fair April 3, 2020 from 1:00 to 2:00 p.m. at Music City Mall. She will be presenting the 7 Magnificent Documents (this addresses estate planning documents, such as wills and power of attorney)