Understanding Lapse in Wills and Trusts

In estate planning, lapse is a technical term that describes what happens when a named gift
in a will or trust cannot be delivered to the intended recipient. A lapse occurs if the
beneficiary dies before the testator, fails to survive the required period, or does not
meet a condition attached to the gift. When a lapse happens, the gift does not automatically
pass to another beneficiary unless the document includes a back‑up provision. The result is
that the specific bequest may “fall into” the residuary or be treated according to the
governing rules of abatement and distribution in the applicable jurisdiction.

Lapse is not just a theoretical issue. It directly affects how much a client’s heirs receive
and can complicate the executor’s job. Without clear language addressing lapse, the estate
risk becomes a moving target, especially when family circumstances change after the plan is
drafted.

Dispo: The Dispositive Provisions that Govern Who Gets What

Dispo is short for disposition, a set of dispositive provisions in a will or trust that
describes exactly how assets should be distributed. This includes who inherits, in what
shares, and under what conditions. The dispositive framework often covers:

• Specific bequests to individuals or charities
• Residuary bequests of the remaining estate
• Class gifts (for example, “to my children”)
• Beneficiary designations that can override the will (life insurance, retirement accounts)
• Provisions for distributions per stirpes or per capita

The way a plan is drafted under dispo shapes not only who receives assets but also the
timing and conditions of those transfers. Per stirpes and per capita are two common methods
used in dispositive provisions. Per stirpes distributes shares by branch, so each branch of a family
receives an equal share through that branch’s descendants. Per capita divides shares equally at the
broadest generation, which can significantly change a gift if a beneficiary dies early.

Key Differences: Lapse vs Dispo

While lapse and dispo are related concepts in estate planning, they answer different questions.

• Lapse is about what happens when a named beneficiary does not survive or cannot
  receive a gift. It is a failure mode for a specific bequest.
• Dispo is the plan for distributing assets. It describes who gets what and how
  it is allocated, covering both survivorship and contingency scenarios.

In practice, the risk of lapse can be mitigated by the dispo structure itself. Well‑crafted
dispositive provisions anticipate possible lapses, directing assets to alternate beneficiaries or
to a trust to continue the intended purpose of the gift.

Common Scenarios and Examples

1. Scenario 1: Simple bequest with no alternates. A will says, “I give $50,000 to my sister
   Jane.” If Jane dies before the testator, the gift lapses unless the will contains an alternate
   mechanism. The lapse makes the $50,000 part of the residuary or subject to state rules.
2. Scenario 2: Anti-lapse protection. The will states, “I give to my sister Jane Smith,
   and if she predeceases me, then to her children, per stirpes.” Here, the anti‑lapse idea ensures that
   Jane’s issue inherits, preserving the intent even if Jane dies early.
3. Scenario 3: Dispo with residue planning. The will provides, “I give the residue to my spouse,
   if he predeceases me, to my children in equal shares.” If the spouse dies before the testator, the dispositive
   clause directs the residue to the children rather than leaving it unallocated.

These examples show how a straightforward distinction between lapse and dispo influences the
outcome. A lapse in a specific bequest can be avoided or redirected by a robust dispo plan.

Strategies to Minimize Lapse Risk and Clarify Dispo

• Anticipate survivorship: Include explicit survival requirements for beneficiaries. A
  common approach is to require a 30‑day or 90‑day survivorship period before a gift becomes effective.
• Anti-lapse provisions: Add anti‑lapse language if your jurisdiction allows it, so gifts
  pass to descendants of predeceased beneficiaries instead of failing.
• Contingent beneficiaries: For each specific bequest, name a contingent recipient
  to step in if the primary beneficiary cannot receive.
• Residuary trusts or pour‑over trusts: Use trusts to hold and manage assets that would
  otherwise be subject to lapse. A trust can preserve the intended use of the gift even if a beneficiary dies.
• Per stirpes vs per capita decisions: Decide early which distribution method best matches your family
  structure and goals, then apply that consistently across all dispositive provisions.
• Update after life changes: Major events—marriages, births, divorces, deaths—warrant a
  review of lapse risks and dispo language.
• Asset‑specific designations: Align beneficiary designations for life insurance and retirement accounts
  with the overall dispositive plan. These designations can bypass a will entirely, so they should harmonize with the state’s
  rules about lapse and disposition.

Practical Drafting Tips for Clear Dispo and Fewer Lapses

Clarity matters. Use plain language and avoid ambiguous phrases. Consider these drafting tips to strengthen your plan:

• Begin with a clear statement of intent: what the estate should accomplish and who should benefit.
• Pair each specific bequest with a contingency plan, so a lapse does not upend your overall goals.
• Prefer explicit survivorship requirements and define what “survives” means (living for 30 days, for example).
• Incorporate an anti‑lapse clause when allowed, and tailor it to your family structure and applicable state law.
• Use a compatible dispositive framework—decide early on per stirpes or per capita and apply it consistently to all gifts.
• Link assets to trusts where appropriate, especially for family wealth preservation or special needs planning.

If you encounter complex family dynamics or sizable estates, consult with an attorney who focuses on estate planning.
A professional can tailor lapse and dispo language to your state’s rules and ensure your intentions are carried out.

Conclusion

Lapse and dispo are fundamental concepts in estate planning, yet they address different facets of how your estate will
be distributed. Lapse explains what happens when a beneficiary cannot receive a gift, while dispo details the overall
plan for who gets assets and under what conditions. By anticipating lapses, using strong dispositive language, and
coordinating beneficiary designations with the will or trust, you can keep your intentions intact and reduce
the administrative burden on your heirs. With thoughtful planning, lapse risks become manageable, and dispo becomes
a reliable roadmap for asset distribution that reflects your values and priorities.