Michigan has an anti-lapse statute. When you understand how these work in conjunction with estate planning, you can ensure your assets go to your intended beneficiaries. Additionally, you could prevent your estate from triggering probate litigation after you pass away. People build estate plans to make things easier for their loved ones. With that in mind, let's go over the impact an anti-lapse statute can have on your estate and how you can plan for it.
What is a “Lapse?”
Anti-lapse statutes exist because the person you leave your assets to may pass away before you. Suppose that happened (and there was no anti-lapse statute) the asset returns—or lapses—to the estate. Under specific circumstances, an anti-lapse statute prevents that from happening. The law states that if your beneficiary passes away before you, the asset goes to their children. However, that isn't always the case.
In Michigan, the anti-lapse statute only applies to descendants of a grandparent. Here are two examples:
- You give your stocks to your brother. Your brother dies before receiving the stocks. The stocks then automatically pass to your brother's children because everyone in this line descends from a common ancestor (the grandparent).
- You give your stocks to your neighbor. If your neighbor (who is unrelated to you) passes away before you, the stocks return to the estate.
You and your attorney can plan for contingencies. If you decide that you don't want your brother's children to receive your stocks, your attorney will use the appropriate language to prevent the anti-lapse statute from taking effect. An experienced estate planning attorney—or one who is familiar with probate litigation—understands how to phrase your requests so they cannot be challenged later.
Given the right set of circumstances, there is also a simple solution that ensures your assets go where you intend them to. We're referring to updating your estate plan. The scenarios we have mentioned above apply to someone who passed away before you. You could very likely have the time and ability to make the appropriate changes without having to rely on an anti-lapse statute to channel your assets to another person. If you don't want any element of your estate going to a relative's descendants, update your estate plan. Should the person pass away before they inherit your asset, assign a new beneficiary. Then apply what you know about anti-lapse statutes to the new beneficiary.
The attorneys at Hamilton Law have extensive experience assisting clients with estate planning and probate matters. For more information regarding updating or creating an estate plan, contact us to schedule a free consultation.