Who Gets an Inheritance if a Beneficiary Dies Without a Contingent Beneficiary in New York and New Jersey?

Estate planning can be complex, especially when it comes to beneficiary designations. Many people overlook what happens when a named beneficiary dies before them and they have not listed a contingent beneficiary. In that situation, the outcome depends on state laws, particularly in New York and New Jersey, where specific regulations govern the distribution of inheritances.

Understanding the role of contingent beneficiaries and how inheritance works when plans go awry can help protect your legacy and ensure your assets reach your intended heirs. This guide examines the inheritance rules in both states and offers practical solutions to mitigate potential complications.

Understanding Primary vs. Contingent Beneficiaries

Before diving into state-specific laws, it’s important to understand the fundamental difference between primary and contingent beneficiaries in your estate plan.

What is a Primary Beneficiary?

A primary beneficiary is the first person, organization, or entity designated to receive your assets after you pass away. This could be your spouse, children, other family members, friends, or even charitable organizations. They are first in line to inherit from your estate, receive payouts from your life insurance policy, or be beneficiaries of other assets.

What is a Contingent Beneficiary?

A contingent beneficiary serves as your backup plan. They only receive your assets if all primary beneficiaries have predeceased you, cannot be located, or refuse the inheritance. Think of them as your “Plan B” for ensuring your assets go to people or organizations you care about, even if your first choice can’t receive them.

Naming both primary and contingent beneficiaries is a crucial step in comprehensive estate planning. Without a contingent beneficiary, a court or executor may distribute your assets in a way that does not reflect your wishes if your primary beneficiary dies before you.

What Happens When a Beneficiary Dies Before You?

When a named beneficiary passes away before the testator (the person who created the will), and the testator does not designate a contingent beneficiary. Then the outcome depends on several factors, including the type of asset and state laws.

The General Rule: Lapse of Gift

In most cases, when a beneficiary dies before the testator and the testator does not name a contingent beneficiary, the gift lapses. This means the intended inheritance becomes invalid and doesn’t automatically transfer to the deceased beneficiary’s heirs. Instead, it typically becomes part of the residuary estate (the remainder of the estate after the executor distributes all specific gifts).

If the lapsed gift was already part of the residuary estate, the executor may distribute it among the remaining residuary beneficiaries. If there are no remaining residuary beneficiaries, the court will distribute the assets. This distribution will be done in accordance with the state’s intestate succession laws.

Anti-Lapse Statutes: How NY and NJ Protect Certain Inheritances

Both New York and New Jersey have enacted “anti-lapse” statutes designed to prevent gifts from failing under certain circumstances. These laws can save an inheritance even when a beneficiary dies before the testator and the testator does not name a contingent beneficiary, but they only apply in specific situations.

New York’s Anti-Lapse Statute and Its Impact on Contingent Beneficiary Rules

New York’s anti-lapse statute (EPTL § 3-3.3) can also impact how assets are distributed when no contingent beneficiary is named in the will. In these cases, the gift passes by “representation,” which is to the deceased beneficiary’s descendants, starting with children, then to grandchildren, and down their bloodline. For example, if you leave $50,000 to your brother in your will, but he dies before you, leaving two children, New York’s anti-lapse statute ensures that each of your brother’s children receives $25,000. (This protection doesn’t apply, however, if your will expressly states a contrary intention or if you’ve provided for an alternate beneficiary to your brother.)

New Jersey’s Anti-Lapse Statute and How It Affects Contingent Beneficiaries

New Jersey’s anti-lapse statute (N.J.S.A. 3B:3-35) is slightly broader in scope and can affect how assets are distributed when no contingent beneficiary is named. In these cases, the gift passes to the deceased beneficiary’s descendants by representation. For example, if a New Jersey resident leaves $50,000 to their niece, but the niece dies before the testator, the $50,000 would go to the niece’s children (if any). As with New York, this protection doesn’t apply if the will specifies otherwise.

What If the Anti-Lapse Statute Doesn’t Apply?

If the anti-lapse statute does not apply to the deceased beneficiary (for example, a friend or charity), or if the beneficiary leaves no surviving descendants, the gift will lapse. This situation often occurs when no contingent beneficiary or alternate heir has been named in the estate plan. The executor then adds the lapsed gift to the residuary estate. The executor then adds the lapsed gift to the residuary estate, which is the portion of the estate remaining after specific gifts, debts, taxes, and administrative expenses have been paid. In other words, it is what’s “left over” for distribution under the residuary clause of a will. If there is no residuary clause, it is distributed according to the state’s intestacy laws.

Intestate Succession: The State’s Default Plan

If the anti-lapse statute does not apply or there is no residuary beneficiary, the state’s intestate succession laws govern who receives the property. These laws establish a hierarchy of heirs, beginning with the spouse and children, followed by parents, siblings, and more distant relatives.

Intestate Succession Table: New York vs. New Jersey

Situation	New York (EPTL § 4-1.1)	New Jersey (N.J.S.A. 3B:5-3)
Spouse, no children	Spouse inherits the entire estate.	Spouse inherits the entire estate.
Spouse and children	Spouse inherits the first $50,000 plus one-half of the remaining estate; descendants inherit the other half, by representation.	If all descendants are also descendants of the spouse, the spouse inherits the entire estate. If any descendant is not also the spouse’s, the spouse inherits the first 25% (but not less than $50,000 or more than $200,000) plus one-half of the balance; the remainder goes to descendants, by representation.
Children only, no spouse	Entire estate to descendants by representation.	Entire estate to descendants by representation.
Spouse and parent(s), no children	Spouse inherits the entire estate.	Spouse inherits the first $50,000 plus one-half of the remaining estate; parent(s) inherit the other half.
Siblings, no spouse, children, or parents	Entire estate to siblings (issue of parents), by representation.	Entire estate to siblings (issue of parents), by representation.
Parents, no spouse, children, or siblings	The entire estate goes to the parents	Entire estate goes to the parents

If the court cannot find any heirs through the intestate succession process. The property may eventually escheat (revert) to the state. This is a situation most people would prefer to avoid. It means the state, rather than your chosen beneficiaries, receives your assets.

Non-Probate Assets

It is important to remember that your will does not necessarily control all your assets upon your passing. You can transfer many valuable assets directly to a primary or contingent beneficiary by naming them through beneficiary designations. Alternatively, if you jointly own assets with someone else and the asset has a “right of survivorship,” the surviving owner automatically receives ownership of the asset. A beneficiary designation or right of survivorship will take effect regardless of what your will states. People refer to these as “non-probate assets.”

If there are no designated beneficiaries, the estate receives the asset, and it will go through probate. The executor distributes it based on the will or, if none, by intestate succession. This can lead to unintended consequences, including probate delays and expenses, potential tax implications, and distribution to unintended heirs. It may also result in the loss of special tax treatment, particularly for retirement accounts. Naming a contingent beneficiary or secondary beneficiary for these accounts is essential to avoid these pitfalls.

How to Prevent Inheritance Complications

Estate planning attorneys in both New York and New Jersey recommend several strategies to prevent complications. These complications often arise when beneficiaries die without naming contingent beneficiaries. Some of them are:

• Name both primary and contingent beneficiaries for all gifts and accounts.
• Use clear language in your will or trust to specify what should happen if a beneficiary predeceases you.
• Consider a “catch-all” provision in your will that addresses how to handle lapsed gifts. People sometimes refer to this as a “taker of last resort.” Lawyers sometimes call this a “taker of last resort.”
• Review and update your estate plan regularly, especially after major life events (births, deaths, marriages, divorces).
• Coordinate your probate and non-probate assets to ensure a cohesive estate plan.

Securing Your Legacy with a Contingent Beneficiary Plan

If the beneficiary dies first and there’s no contingent, New York and New Jersey may treat the inheritance as lapsed. It can then become part of the residuary estate or pass according to the rules of intestate succession. However, anti-lapse statutes may save the gift for the deceased beneficiary’s descendants if they are close relatives.

The complexity of these laws and their state-specific variations highlights the importance of working with an experienced estate planning attorney who understands the nuances of inheritance laws in your state. By naming contingent beneficiaries and creating a comprehensive estate plan, you can ensure that your executor distributes your assets according to your wishes, regardless of unforeseen circumstances. For more inquiries related to estate planning in New Jersey and New York, please do not hesitate to contact The Chamberlain Law Firm by clicking here or calling us at (201) 273-9763.

This article is for general legal information only. It is not legal advice to rely on for your specific fact pattern. No opinion expressed above can be used to avoid tax penalties that may be imposed otherwise on the reader, nor to promote or market to any other person any transaction or matter addressed herein. Advice to rely on can be gotten only after a thorough discussion and investigation of the facts of your situation with counsel licensed in your state. No attorney-client relationship has been established by this communication.