Titles - Lapse

Learning Outcomes

After reading this article, you will be able to explain the doctrine of lapse, identify when anti-lapse statutes apply, and analyze the effect of lapse on class gifts and residuary estates. You will be able to apply these principles to MBE-style questions and distinguish between lapse, anti-lapse, and related doctrines.

MBE Syllabus

For the MBE, you are required to understand the rules governing the failure of testamentary gifts due to predeceasing beneficiaries and the statutory modifications that may prevent such failure. This article covers:

• The doctrine of lapse and its application to testamentary gifts.
• The operation and limits of anti-lapse statutes.
• The effect of lapse on class gifts and residuary clauses.
• The distinction between lapse and ademption.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. If a beneficiary named in a will predeceases the testator, what generally happens to the gift?
   1. It passes to the beneficiary's heirs.
   2. It lapses and falls into the residue or passes by intestacy.
   3. It is held in trust.
   4. It is distributed to the other named beneficiaries.
2. Which of the following is most likely to prevent a gift from lapsing when the beneficiary predeceases the testator?
   1. The beneficiary is a friend of the testator.
   2. The anti-lapse statute applies and the beneficiary left surviving issue.
   3. The beneficiary disclaimed the gift.
   4. The will is silent on survivorship.
3. In a class gift, if one member of the class predeceases the testator, what is the usual result?
   1. The gift to that member lapses and passes to the member's heirs.
   2. The entire class gift fails.
   3. The surviving class members take the entire class gift.
   4. The anti-lapse statute always applies.

Introduction

When a testator makes a gift in a will to a beneficiary who dies before the testator, the gift may fail under the doctrine of lapse. This can have significant consequences for the distribution of the estate, especially if the will does not address survivorship or if statutory anti-lapse provisions apply. Understanding lapse, anti-lapse statutes, and their effect on class gifts and residuary clauses is essential for MBE success.

Key Term: Lapse The failure of a testamentary gift because the beneficiary dies before the testator, causing the gift to fall into the residue or pass by intestacy.

The Doctrine of Lapse

At common law, if a beneficiary named in a will dies before the testator, the gift to that beneficiary lapses. The lapsed gift is not distributed to the beneficiary's heirs but instead becomes part of the residuary estate or, if there is no residue, passes by intestacy.

Key Term: Anti-Lapse Statute A statute that prevents a gift from lapsing by allowing certain predeceasing beneficiaries' descendants to take the gift in their place, usually if the beneficiary was related to the testator and left surviving issue.

Application of Lapse

• Applies to both specific and general gifts.
• If the lapsed gift is part of the residue, it "falls into" the residue and is distributed with the rest of the residuary estate.
• If the lapsed gift is itself a residuary gift, the lapsed portion passes by intestacy unless the will provides otherwise.

Worked Example 1.1

Testator leaves "$10,000 to my friend Mark, and the rest to my daughter Lisa." Mark dies before the testator. What happens to the$10,000?

Answer: The gift to Mark lapses. The $10,000 falls into the residue and passes to Lisa as part of the residuary estate.

Anti-Lapse Statutes

Most jurisdictions have enacted anti-lapse statutes to modify the harsh result of the common law. These statutes typically apply when the predeceasing beneficiary is a close relative of the testator (such as a descendant or sibling) and leaves surviving issue. If the statute applies, the gift passes to the beneficiary's descendants, not to the residue or by intestacy.

Limits of Anti-Lapse Statutes

• Only apply if the beneficiary is within the class of relatives specified by the statute (usually descendants, siblings, or sometimes more remote relatives).
• The beneficiary must leave surviving issue.
• The will must not express a contrary intent (e.g., "if he survives me" or "to Mark, if living").

Worked Example 1.2

Testator's will leaves "$5,000 to my brother Alan." Alan dies before the testator, leaving two children. The jurisdiction's anti-lapse statute applies to gifts to siblings who leave issue.

Answer: The gift does not lapse. Alan's two children take the $5,000 in equal shares under the anti-lapse statute.

Exam Warning

If the will expressly requires survivorship (e.g., "to Alan, if he survives me"), the anti-lapse statute does not apply, and the gift lapses even if Alan leaves issue.

Lapse and Class Gifts

A class gift is a gift to a group described by relationship or status (e.g., "to my children"). If a member of the class predeceases the testator, the general rule is that the surviving class members take the entire class gift, unless the anti-lapse statute applies.

Key Term: Class Gift A testamentary gift to a group of persons described by relationship or status, where the share of a predeceasing member is divided among the survivors unless the anti-lapse statute applies.

Anti-Lapse and Class Gifts

• If the anti-lapse statute applies to the class member, and the member leaves surviving issue, the issue take that member's share.
• If the anti-lapse statute does not apply, the surviving class members take the share of the predeceasing member.

Worked Example 1.3

Testator leaves "$60,000 to my grandchildren in equal shares." Testator has three grandchildren: A, B, and C. B dies before the testator, leaving two children. The anti-lapse statute applies to gifts to descendants.

Answer: B's two children take B's $20,000 share under the anti-lapse statute. A and C each take$20,000.

Lapse in the Residuary Clause

If a gift of a portion of the residue lapses, the lapsed share passes by intestacy unless the will provides otherwise or the jurisdiction follows the "no residue of a residue" rule. Many states now provide that the remaining residuary beneficiaries take the lapsed share proportionally.

Revision Tip

Always check whether the anti-lapse statute applies to the beneficiary and whether the will expresses a contrary intent. If the statute does not apply, the common law rule of lapse controls.

Key Point Checklist

This article has covered the following key knowledge points:

• At common law, a gift lapses if the beneficiary predeceases the testator.
• Anti-lapse statutes may prevent lapse for certain relatives who leave surviving issue.
• Anti-lapse statutes apply only if the beneficiary is within the specified class and leaves issue.
• In class gifts, the anti-lapse statute may allow the issue of a predeceasing class member to take that member's share.
• Lapsed residuary gifts may pass by intestacy or to the other residuary beneficiaries, depending on the jurisdiction.
• Express survivorship language in the will overrides the anti-lapse statute.

Key Terms and Concepts

• Lapse
• Anti-Lapse Statute
• Class Gift