Specifying who gets what property when you die is one of the main reasons to write a will. The will of the decedent (the person who died) can specify specific gifts and give the remainder, or leftover, estate to someone. Issues can arise if a beneficiary dies before the decedent.
The decedent can specify what happens to a gift if the intended beneficiary dies before distribution. One common method is to name a contingency beneficiary. For example, if the decedent left his baseball card collection to his brother, he could name a contingent beneficiary to take the baseball card collection if his brother dies. The language might look something like "I give my baseball card collection to my brother, Don, but if Don dies before me then I leave the collection to my older brother, Raph."
Lapse and Anti-Lapse
Absent any contingencies, the state's default probate laws come into effect. States generally use two types of statutes: lapse statues or anti-lapse statutes. If the state uses a lapse statute, the gift is lost if the beneficiary dies before distribution; it simply becomes part of the entire estate and whoever is entitled to the remainder of the estate takes the gift. Under anti-lapse statutes, the gift generally passes to the beneficiary's family (usually the grandchildren).
Per Stirpes or Per Capita
Depending on how the anti-lapse statute is worded, the beneficiary's gift may pass by the root (per stirpes) or by the head (per capita). Under per stirpes, the deceased-beneficiary's family (typically the grandchildren of the decedent) receive an equal share of the gift. So if the will left the estate to both of the decedent's children, A and B, but B died before distribution of the estate and left three children (the decedent's grandchildren), then A would receive half of the estate and B's children would split B's share. In contrast, per capita distribution affects all the beneficiaries. Under the same scenario --- A surviving and B leaving three children --- the gift would be divided by four with each beneficiary taking a fourth. The decedent may also specify whether she wants per stirpes or per capita distribution in her will.
The specifics of what happens to a gift if the beneficiary dies before the decedent depend on the individual facts of each case. You may need to interpret the specific language in the will or you may need to interpret the specific language of your state's probate laws. Both actions require legal analysis. To ensure your rights are protected, consider speaking to an attorney before proceeding on your own.