What happens in your Will if a child dies before you?

If a child dies before me, who gets their interest in my Will?

What happens in your Will if a child dies before you?

A mother died with four children. One of her children had already died.

Her Will said her estate went to her “children as shall survive me.” Three words that cost the family a court case.

The surviving grandchildren — the children of the dead child — got nothing under the Will. They had to go to court to claim what their dead parent would have got. The ACT Supreme Court in In the Estate of Koppie [2019] ACTSC 106 ultimately found in their favour. But only because of a statutory anti-lapse provision that stepped in to save the grandchildren. Not because the Will said so. The Will was silent.

The legal fees were paid from the estate.

A bloodline gifting clause — standard in every Legal Consolidated Will — fixes this problem.

Wills need to deal with uncertainty, such as the death of a child

There are three great uncertainties in building your Will:

1. You do not know the date of your death.

2. You do not know what assets you own.

3. We do not know what the law is, as laws change all the time.

That is why building a Will requires flexibility. Flexibility reduces the 32% tax on your super when you die. Flexibility allows your beneficiaries to turn on a Divorce Protection Trust or Bankruptcy Trust after you are dead.

One other uncertainty is what happens if a beneficiary dies before you. There are two choices:

1. Does the asset go back to the ‘pot’ to be divided up with the remaining living beneficiaries who outlasted you?

2. Or, do the dead child’s own children get what the dead beneficiary would have got?

In your Will, what happens if a child dies before you?

If a child dies before you, their gift in your Will usually passes to their own children (your grandchildren). This happens because almost all Australian Wills, including Legal Consolidated Wills, contain a blood gifting clause.

In Legal Consolidated, depending on how you answer the questions, the wording of our bloodline gifting clause is:

7.   The Children of the Primary Beneficiary

Unless my Will otherwise directs, if any Primary Beneficiary dies before me or dies before reaching the Age of Majority, leaving children then those children (as each of those children reach the Age of Majority) take what their parent would have taken. Such children then maintain the trusts their parent would have maintained, had they reached the Age of Majority, equally as tenants in common.

Other names for a bloodline gifting clause

The bloodline gifting clause is also referred to as a:

  • per stirpes clause (this is Latin for ‘down the bloodline’)
  • substitution clause
  • anti-lapse clause
  • lineal descent clause

Lineal descent ensures assets pass through the bloodline. This prevents grandchildren from being excluded if their parent dies before the Will maker. Old Wills use the Latin term per stirpes.

Bloodline gifting clauses in a Will

Consider how this works in practice.:

You have three children. One of your children is Colin.

Sadly, Colin dies before you. Colin himself has two children. Because of the bloodline gifting clause, what Colin would have got goes to his children (your grandchildren). Your grandchildren step into his shoes (each to 1/6 of your estate).

Take the same example. But this time, Colin and his two children died in the same car accident.

Because Colin and his children all died before you, that branch of the family ends. The gift goes back to the pot. The remaining living beneficiaries who outlasted you divide those assets. Your two remaining children now get 50/50.

This is automatic. If Colin dies and you wish the above to happen, then you do not need to update your Legal Consolidated Will. (Legal Consolidated Wills and POAs can be updated for free. This is often as you wish. So if you did wish to update your Will, for any reason, then you can do so for free.)

Overriding the lineal descent clause

You maintain total control when you build a 3-Generation Testamentary Trust Will. You can override the bloodline gifting clause.

For example, you leave $10,000 to a friend. You do not know his children. If your friend dies before you, you want the gift to fail. In this case, you merely override the lineal descent requirement for that specific gift. The $10,000 stays in your estate to be divided among your Residuary Beneficiaries.

Building a Legal Consolidated 3-Generation Testamentary Trust Will handles these exact uncertainties automatically. It ensures the right people get the money, with the flexibility to protect it from the Family Court and bankruptcy courts after you die.