I often tell people that estate planning is the "what if business" - what if you become incapacitated, what if the beneficiaries you named are not living? What happens then?
Recently a client indicated that they wanted to use a distribution scheme called "per capita by generation". If one of their children (G2) predeceases them, then that child's share would be distributed, not to his or her children, but to all of the members in the next generation (G3 - the child's children, nephews and neices). If a G3 member is not living, then that G3's share would be distributed among equally among all of the members of the next generation (G4).
The client thought that they were being fair to all of the G3 members so that they would each receive some funds. While at first this may seem equitable because the next generation is sharing equally, in fact it may not be equitable. For example, if a member of G2 is deceased, G2's children do not receive their parent's full share of the estate. Presumably, the other members of G3 will also inherit at least some of the inherited assets from their G2 parents, thereby increasing those G3 members' share.
In my experience, the most common "what if" scenario in plans is that if a beneficiary is deceased , then that beneficiary's share is distributed among his or her children. However, it can also lapse or be distributed among the survivor's of a class.
Regardless of what your answer is for the "what if" question, if you do not have a valid estate plan, then the state that you live in will provide the answer for the "what if" question. Often that answer is not the answer that you would actively choose.