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Estate planning should plan for ‘what-if” scenarios

On Behalf of | Jan 2, 2019 | Uncategorized

Illinois residents who have taken the time to create an estate plan should feel a certain sense of satisfaction and confidence that whatever the future holds, there is an organized scheme in place to handle the distribution of property to their heirs and otherwise wrap up the business of the estate. Most people realize it is necessary to revisit the decisions made and consider updating the documents every so often or more frequently when a major life event occurs. However, many estates are planned without thought as to what may happen if an unusual or unanticipated situation arises.

For example, financial consultants report people typically change their will upon the birth of each additional child, naming each in the document. But if the unthinkable occurs, and one of the children predeceases the testator, the person who made the will, that child’s share can be handled in different ways. One option is to take the deceased child’s share and distribute it between the living children. This is called per capita distribution.

Another option is known as per stirpes distribution, which involves distribution to the next generation. For instance, if the predeceased child has children of his or her own, the share that would have gone to that individual is divided equally among his or her children. It is important to consider these scenarios not only for wills and trusts, but also for financial accounts or life insurance policies that allow for or require designating a beneficiary.

An estate planning lawyer will emphasize that accounts or policies with designated beneficiaries take precedence over a will if there is any discrepancy between the two. The transfer of title to the beneficiary occurs as a matter of law immediately upon the death of the original owner of the asset and is not considered to be part of the probate estate.