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 had four children, but one had already died before her.

Her Will said her estate went to her

‘children as shall survive me’.

Five 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.

Legal Consolidated’s 3-Generation Testamentary Trust Wills include a bloodline gifting clause as standard.

What happens to a child’s share in a Will when they die before me?

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. You do not know what the law will be. 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?

What is a bloodline gifting clause in a Will?

If a child dies before you, their gift does not disappear. It passes automatically to their children — your grandchildren. This is a bloodline gifting clause. All Legal Consolidated Wills include this anti-lapse clause.

The Legal Consolidated wording is plain:

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.

No court application. No family argument. Automatic.

Other names for a bloodline gifting clause

The bloodline gifting clause is also referred to as a:

• per stirpes clause; Latin for ‘down the bloodline’. (One of my students, who speaks fluent Latin, has corrected me to say it literally means ‘by roots’ or ‘by branch’. I find that unhelpful.)

• substitution clause

• anti-lapse clause

• lineal descent clause

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

Example of a bloodline gifting clause in a Will

You have three children. Colin is one of them. Colin dies before you in a car accident. Colin has two children of his own — your grandchildren.

Because your Legal Consolidated Will contains a bloodline gifting clause, Colin’s two children step into Colin’s shoes. Each receives 1/6 of your estate. Your two surviving children each receive 1/3.

Now take the same example. This time, Colin and both his children die in the same accident. The bloodline ends. Colin’s share goes back to the pot. Your two surviving children split everything 50/50.

Both outcomes are automatic. You do not need to update your Will.

What happens without a bloodline clause: In the Estate of Koppie [2019] ACTSC 106

In the Estate of Koppie [2019] ACTSC 106, the mother’s Will used the words ‘children as shall survive me.’ No bloodline clause. No substitution clause. Nothing.

When one of her four children died before her, the grandchildren had no entitlement under the Will.

They were forced to go to court to try to rely on the little-used Section 31(1) of the Wills Act 1968 (ACT). This is a statutory safety net to inherit their dead parent’s share.

In a 19-page legal decision, the court found for the grandchildren. But the family still had to litigate to get there.

The lesson is not that the grandchildren lost. The lesson is that they had to fight at all. And the estate paid all the lawyers’ fees.

A Legal Consolidated Will makes that fight unnecessary.

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.

Does your Will protect your grandchildren if a child dies before you?’

If you do not have a 3-Generation Testamentary Trust Will, speak to your accountant, lawyer and financial planner. Ask them one question: Does my Will have a bloodline gifting clause?

Build a 3-Generation Testamentary Trust Will online. The building process is free. Read the hints. Answer the questions. Lock and build.