What happens when a beneficiary of a deceased person’s probate estate or living trust dies during an ongoing administration and before receiving the full distribution of their inheritance?  The death of a beneficiary scenario can arise in settling either a probate estate or a trust administration.  The beneficiary’s death affects both the administration of the first decedent’s probate estate or trust and the administration of the beneficiary’s own estate. 

          Consider an ongoing probate administration of a deceased mother’s estate where a son dies prior to receiving his inheritance.  The deceased son’s estate can claim his undistributed inheritance; which it will in turn distribute to the beneficiaries or heirs of the son’s estate, as relevant. 

          This, however, may unfortunately require probating the deceased child’s estate.  Whether a probate is required depends both on the gross value of the son’s own probate estate, which is increased by the amount of the son’s unreceived inheritance, and also whether some or all of the son’s estate passes to his surviving spouse or registered domestic partner, as relevant. 

          When is a probate required?  In California, probate is required when the gross value of a decedent’s estate exceeds $150,000 and passes to someone other than the decedent’s surviving spouse or registered domestic partner. 

          No probate is required to transfer assets to a decedent’s surviving spouse or registered domestic partner.  A surviving spouse or domestic partner is entitled to use a spousal property court petition to transfer title to real property and other assets held in the name of the deceased spouse into the surviving spouse or the registered domestic partner’s name, as relevant. 

          Small estates under $150,000 also do not require probate and can usually be settled by affidavits or, when the estate includes real property worth more than $50,000, a small estate petition to confirm title to real and to personal property.  Sometimes a probate of a small estate is necessary due to issues related to the decedent’s debts or determining who is entitled to receive a portion of the estate.

          Holding assets in a living trust avoids going to court:  It avoids probate, spousal property petitions, and small estate petitions.   Thus anytime real property worth more than $50,000 is involved it usually makes sense for the owner to hold title in his trust.

          Who inherits from the deceased son’s estate?  If the son had a last will and testament then it controls.  If the son had a living trust then the son almost always has an accompanying “pour over will”. It, as its name implies, leaves, i.e., “pours”, everything in the son’s estate to his revocable living trust.  Either way the son’s will might need to be probated, discussed above.  Without a will, the son’s heirs inherit under the laws of intestate succession.  The decedent’s surviving spouse, or registered domestic partner and children are always the heirs if they survive.

          Settling an intestate estate, like settling a testate estate, i.e., where the decedent has a will, can involve probate, a spousal property petition, small estate affidavits or small estate court petitions to confirm title to real and personal property, discussed above.

          Next, instead consider a trust beneficiary who dies during an ongoing administration of a decedent’s trust.  Sometimes, the trust may provide that any undistributed inheritance not received by a beneficiary because the beneficiary dies during trust administration passes directly to specified alternative beneficiaries.  That greatly simplifies matters and also better ensures that the deceased settlor’s assets go to intended beneficiaries.

          Anyone confronting any of these legal issues should consult a licensed attorney and not reach any legal conclusions from the above general discussion. 

“Serving Lake and Mendocino Counties for nineteen years, the Law Office of Dennis Fordham focuses on legacy and estate planning, trust and probate administration, and special needs planning. We are here for you. 870 South Main Street Lakeport, California 95453-4801. Phone: 707-263-3235.”