1. What Does It Mean When a Beneficiary Dies Before You?

2. What Does Alberta Law Say?

3. How the Process Works

4. Why You Should Name Alternate Beneficiaries

5. Common Mistakes

6. Costs and Considerations

7. When Should You Speak With an Estate Lawyer?

8. How Bridgestone Law Can Help

Introduction

One of the most common assumptions people make when preparing a will is that the people they have chosen as beneficiaries will outlive them. Unfortunately, life is unpredictable. A child, sibling, close friend, or other loved one may pass away before you do, leaving your executor and your family wondering what happens to the gift you intended for that person.

In Alberta, the answer depends on several factors, including the wording of your will, your relationship to the deceased beneficiary, and the provisions of the Wills and Succession Act. In some cases, the gift may pass to the beneficiary's own children. In others, the gift may become part of the residue of your estate or be distributed according to other provisions in your will. If your will names an alternate beneficiary, the outcome is often much simpler.

Planning for this possibility when your will is prepared can help ensure your estate is distributed according to your wishes while reducing the risk of confusion, delays, or disputes.

What Does It Mean When a Beneficiary Dies Before You?

When a beneficiary dies before the person who made the will (known as the testator), they are often referred to as a predeceased beneficiary.

Because a will only takes effect upon the testator's death, a person who dies first generally cannot receive the gift that was intended for them.

The next question becomes:

• Does the gift pass to someone else?

• Does it go to the beneficiary's children?

• Does it become part of the residue of the estate?

• Or does Alberta law determine what happens?

The answer depends on both the wording of the will and the applicable law.

What Does Alberta Law Say?

In Alberta, the Wills and Succession Act contains rules that may apply when a beneficiary dies before the testator.

In some circumstances, particularly where the deceased beneficiary was a close family member of the testator and left descendants, the legislation may prevent the gift from automatically failing. In other situations, however, the gift may lapse and be distributed according to the remaining provisions of the will.

The outcome depends on the wording of the will, the relationship between the testator and the beneficiary, and the facts of the particular case.

Because these rules can be technical, carefully drafted wills often include express provisions explaining exactly what should happen if a beneficiary dies before the testator.

How the Process Works

Step 1: Determine Whether the Beneficiary Survived the Testator

The executor's first task is determining whether the beneficiary survived the deceased.

If the beneficiary was alive at the time of the testator's death, the gift will generally be administered in accordance with the will.

If the beneficiary died first, additional analysis is required.

Step 2: Review the Wording of the Will

Many modern wills specifically address this situation.

For example, a will may state:

• who receives the gift if the original beneficiary dies first;

• whether the gift passes to that beneficiary's children;

• whether the gift becomes part of the residue of the estate; or

• whether another named person receives the gift.

A clearly drafted will often answers the question without requiring reliance on default legislative rules.

Step 3: Consider the Application of Alberta Law

If the will does not address what happens, the executor must consider whether the Wills and Succession Act contains provisions that apply to the particular gift.

Depending on the circumstances, Alberta law may preserve the gift for certain descendants of the deceased beneficiary or may require the gift to be distributed in another manner.

This analysis can be more complicated than many people expect and may require legal advice.

Step 4: Distribute the Estate

Once the executor has determined who is legally entitled to receive the gift, the estate can be distributed in accordance with the will and Alberta law.

Carefully documenting the reasoning behind the distribution helps protect the executor and provides clarity for the beneficiaries.

Why You Should Name Alternate Beneficiaries

One of the simplest ways to avoid uncertainty is to name an alternate beneficiary (sometimes called a contingent beneficiary) in your will.

An alternate beneficiary is the person or organization who receives a gift if your first-choice beneficiary dies before you or is otherwise unable to inherit.

For example, your will might state:

"I leave my lake property to my son, Michael. If Michael does not survive me, I leave the property to his children in equal shares."

Or:

"I leave $25,000 to my sister, Jennifer. If Jennifer does not survive me, I leave that gift to the Alberta Children's Hospital Foundation."

Including alternate beneficiaries provides clarity for your executor and significantly reduces the possibility of disputes or unintended consequences.

Practical Examples

Example One: The Will Names an Alternate Beneficiary

Helen leaves her investment account to her brother.

Her will also states that if her brother dies before her, the investment account is to be divided equally between his two children.

Her brother passes away several years before Helen.

Because the will clearly addresses the situation, the executor can distribute the investment account directly to Helen's niece and nephew without uncertainty.

Example Two: No Alternate Beneficiary Is Named

David leaves his classic vehicle to a close friend.

Unfortunately, his friend dies before David, and the will does not explain what should happen if that occurs.

The executor must determine whether Alberta's legislation applies or whether the gift becomes part of the residue of the estate.

Although the estate can still be administered, additional legal analysis is required that could likely have been avoided with more detailed estate planning.

Example Three: A Blended Family

Margaret has children from her first marriage and grandchildren from her second husband's family.

She carefully drafts her will to specify what should happen if any beneficiary dies before her, including who should inherit each gift and whether descendants should receive that beneficiary's share.

By addressing these possibilities in advance, she greatly reduces the likelihood of future family disagreements.

Common Mistakes

Assuming Beneficiaries Will Outlive You

Many people prepare a will and never consider what would happen if one of their beneficiaries dies first.

Including alternate beneficiaries provides an important safeguard against unexpected life events.

Failing to Review an Older Will

A will prepared many years ago may name beneficiaries who have since died.

Reviewing your will regularly helps ensure it still reflects your wishes and current family circumstances.

Not Naming Alternate Beneficiaries

Without alternate beneficiaries, the executor may need to rely on legislative rules or interpret the remaining provisions of the will.

Naming alternates often provides greater certainty and simplifies the administration of the estate.

Forgetting About Changes in Family Circumstances

Births, deaths, marriages, divorces, and new grandchildren can all affect your estate plan.

Updating your will following major life events helps ensure it continues to reflect your intentions.

Assuming Every Gift Is Treated the Same

Different gifts may be treated differently depending on the wording of the will and the applicable law.

For example, a specific gift of jewelry may be treated differently than a gift of the residue of the estate.

Careful drafting helps avoid unintended results.

Costs and Considerations

Adding alternate beneficiaries generally involves little additional cost when preparing a will, but it can save significant time, expense, and uncertainty during estate administration.

Other considerations include:

• the age and health of your beneficiaries;

• blended family relationships;

• beneficiaries who live outside Canada;

• charitable gifts;

• business interests;

• jointly owned property;

• tax implications; and

• whether your beneficiary designations on registered accounts and insurance policies are consistent with your will.

Reviewing your estate plan every few years, or after significant life events, is often the best way to ensure it continues to meet your objectives.

When Should You Speak With an Estate Lawyer?

Professional legal advice is particularly valuable if:

• one of your beneficiaries has died;

• you have a blended family;

• you wish to leave gifts to minor children or grandchildren;

• you are uncertain how Alberta law applies to your circumstances;

• you own a business or multiple real estate holdings;

• you have beneficiaries living outside Canada;

• your will has not been updated for several years;

• you wish to change your estate plan after a marriage, separation, or divorce; or

• you are unsure whether a codicil or a new will is appropriate.

An estate lawyer can review your will, identify potential issues before they arise, and help ensure your wishes are clearly documented.

How Bridgestone Law Can Help

Estate planning is about preparing for life's uncertainties as much as it is about deciding who will inherit your property. Including alternate beneficiaries and regularly reviewing your will can help ensure your estate is distributed according to your wishes, even if circumstances change over time.

Bridgestone Law assists individuals and families throughout Calgary and Alberta with wills, estate planning, probate, and estate administration. We can review your existing will, recommend practical updates, prepare new wills or codicils where appropriate, and help ensure your estate plan continues to reflect your wishes and complies with Alberta law.