Unfortunately they do and it can be an ugly side of humanity to witness. the position in law is that if there is no substitution or provision in the will nominating somebody else to inherit in place of a person who pre-deceases the testator, the s33 of the Wills Act intervenes. s33(1) provides:
(a) a will contains a devise or bequest to a child or remoter descendant of the testator; and
(b) the intended beneficiary dies before the testator, leaving issue; and
(c) issue of the intended beneficiary are living at the testator’s death,
then, unless a contrary intention appears by the will, the devise or bequest shall take effect as a devise or bequest to the issue living at the testator’s death.
what that means is that unless your father-in-law has failed to provide a substitution or provision and where he has not excluded s33 in a specific clause in the Will, your husband's share would pass to any of your husband's natural or adopted children who survive him.
This does not assist you unfortunately but it means that your husband's share in the above circumstances would pass to his son. however, this is based on the above assumptions and ideally you would have access to your father-in-law's will again to check it carefully now you know what to look for to check that there is no substitution provision nor a clause excluding section 33 of the Wills act. If neither are present, it may be prudent to accept your brother-in-law's be reduced offer being at least something. However it is possible that your BIL may retract that offer if and when he learns that your husband's share of the property does not pass to him (assuming that may be the case). Therefore if you can act quickly in this regard it may be to your advantage.
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