Legal Definitions - lapsed legacy

A lapsed legacy occurs when a gift specified in a will cannot be given to the intended recipient because that recipient is no longer alive at the time the person who made the will (the testator) dies. When a legacy lapses, the gift typically becomes part of the remaining assets of the estate (known as the "residue") and is distributed according to the will's residuary clause, or if there isn't one, according to state law.

• Example 1: Sarah's will states, "I give my antique grandfather clock to my dear friend, Robert." Sadly, Robert passes away two years before Sarah does. When Sarah eventually dies, the gift of the grandfather clock to Robert is a lapsed legacy because Robert is no longer alive to receive it. The clock will then become part of Sarah's remaining estate to be distributed to her other beneficiaries.

• Example 2: Michael's will includes a provision that reads, "I bequeath $25,000 to my favorite charity, the Green Earth Foundation." Unbeknownst to Michael, the Green Earth Foundation ceased operations and dissolved six months before Michael's death. In this scenario, the $25,000 gift to the foundation is a lapsed legacy because the intended recipient no longer exists to accept the donation. The money will then be added to the rest of Michael's estate.

• Example 3: In her will, Eleanor leaves her valuable collection of rare stamps to her nephew, David. Her will also specifies that "all the rest and residue of my estate" should go to her sister, Susan. David tragically dies in an accident a year before Eleanor passes away. The gift of the stamp collection to David is a lapsed legacy. Since David is not alive to receive it, the stamp collection will not go to his heirs. Instead, it will fall into the "residue" of Eleanor's estate and be distributed to her sister, Susan, as the residuary beneficiary.