Lapsed Gifts and Anti-Lapse Statutes

To receive a gift under a will, the beneficiary must survive the donor; otherwise, if the there is no gift-over clause, then the gift lapses and it may go to someone other than whom the testator would have preferred.

Common law required that the beneficiary survive the donor by at least 1 millisecond by clear and convincing evidence. However, the will can provide a longer survival time, and often, does, such as 120 hours, 30 or 60 days.

Lapsed Gifts

If the beneficiary predeceases the testator, then the gift fails — the gift lapses. The law assumes that the testator gave the gift to the beneficiary for her own use and not for her descendants.

If the beneficiary dies before the will is executed, then the gift is void, but if the beneficiary was alive when the will was executed but died before the testator, then the gift lapses. Although the distinction between a void gift and a lapsed gift seems arbitrary, the law sometimes makes a distinction and treats them differently.

If a gift fails for any reason — because it is void, it lapses, it is given to an ineligible beneficiary, such as pets, or because it violates the Rules Against Perpetuities — and there are no default takers, then specific rules govern what happens to the gift.

A specific gift goes to the residue of the estate, but if there is no will, then it is distributed under intestacy. If part of a residuary clause fails, then the property is distributed under the residuary clause that does not fail.

There are 2 legal doctrines to save failed bequests: anti-lapse and class gifts. While these doctrines apply mostly to gifts under wills, a few states have passed statutes applying the anti-lapse statutes to will substitutes, such as trusts and payable-on-death contracts, such as life insurance or IRA's.

Anti-Lapse Statutes

If the beneficiary is closely related to the testator, then there is a presumption that the testator would have wanted the property distributed to the beneficiary's descendants. Hence, anti-lapse statutes were passed, which require that gifts to a deceased beneficiary who was closely related to the testator to go to the beneficiary's heirs. All states have passed anti-lapse statutes, but they differ in their details.

However, almost all statutes require that the deceased beneficiary be within a certain degree of relationship with the testator and that the beneficiary has descendants that survived both the beneficiary and the testator, and that the will did not have a gift-over clause, which would specify who would get the gift if the beneficiary predeceased the testator.

Some other events may cause a lapse as defined under the law. Besides the beneficiary predeceasing the testator, a lapse may also occur if: the beneficiary did not survive by the time required by the will or by law; if the beneficiary disclaims the gift; or for any other reason that the gift fails, such as if the beneficiary kills the testator.

Common law applied the anti-lapse statutes only to lapsed gifts, not to void gifts, but the modern trend, including the UPC, is to apply the anti-lapse statutes to both void and lapsed gifts.

The states differ widely on the required degree of relationship to the testator before the anti-lapse statutes apply, but UPC §2-605 includes grandparents and their descendants and stepchildren.

Note that bequests to spouses are not subject to anti-lapse statutes; if the spouse predeceases the testator, then the gift to the spouse fails. The rationale for this approach is because the spouse may have children that are not also the testator's and if the spouse had no children, then it would go to parents or grandparents or her siblings, so applying the anti-lapse statute may cause property to go to the spouse's close relatives rather the testator's, which is probably not what the testator would have wanted.

Another problem with gifts to spouses is that if the spouse is one of the beneficiaries of the residue of the estate, then, under common law, if her gift fails, it is distributed under intestacy rather than to the other residuary beneficiaries. The modern trend, however, is to distribute the gift to the other residuary beneficiaries.

The common law has held that where there is any evidence of a contrary intent expressed in the will, such as using survival phrases such as "if he survives me" or "to my surviving spouse", then the anti-lapse statutes will not be applied. However, many have criticized such references as not being the intention of the testator, since, in fact, such expressions are often inserted as boilerplate text and do not necessarily express the intent of the testator. For instance, UPC §2-603(b)(3) provides more unambiguous illustrations to express a contrary intent, such as: "and not to the devisee's descendants; "not to the appointee's descendants"; or adding to the residuary clause "including all lapsed or failed devises".