Usually, to receive benefits after someone dies, the recipient has to survive the deceased person (decedent). But multiple people can die at the same time or, at least, near in time. When a decedent and beneficiary die close in time, a common disaster clause determines the order in which other beneficiaries should receive estate property or insurance proceeds.
Law Office of Andrew M. Lamkin P.C. can help you ensure your estate plan covers all contingencies. Our firm focuses on estate planning law, and we can help you feel confident that your estate plan is thorough and not vulnerable to surprises.
What Is a Common Disaster Clause?
A common disaster clause is a legal provision that activates when two people, named as beneficiaries in each other’s estate planning documents or insurance policies, die simultaneously or near-simultaneously. It establishes what should happen to benefits in the event of simultaneous deaths.
In the insurance context, insurance proceeds may go to a beneficiary’s estate rather than another beneficiary if:
- If you do not designate an alternative beneficiary,
- No common disaster provision applies, and
- The beneficiary dies before or close in time to you.
Assets that pass through probate take longer to arrive and may come with higher costs.
But what is a common disaster clause in the estate context? It states which person the law considers to have died first for estate purposes. Hiring an estate planning attorney is essential when you want to ensure your estate plan effectively addresses all potential scenarios, including simultaneous deaths.
How Might a Common Disaster Provision Affect an Estate?
A common disaster provision may seem unnecessary. For example, if a married couple dies at the same time, their estates may pass to their children regardless of who dies first. However, the example below illustrates that who dies first can be significant.
Anna and Bill’s Estate Plans
Anna and Bill are married. Anna has two children, Charlie and Donna, who are from a previous relationship. Anna and Bill also share one daughter, Emma. Anna and Bill have marital property but no separate property. By law, each equally owns their marital property.
In her will, Anna leaves half of her assets to Bill and the other half to Charlie and Donna. If Bill dies before Anna, her will states that her property passes to Charlie, Donna, and Emma equally.
Bill leaves all his assets to Anna. If Anna dies first, Bill’s property goes to Emma in full.
Consequences of Simultaneous Death
Anna and Bill get into a car accident and die at approximately the same time. If Bill dies first, Anna’s estate takes all of Bill’s property. That property then passes to her three children in equal parts.
But if Anna died first, half her estate would pass to Bill’s estate and the other half to Charlie and Donna. The half Bill received would go entirely to Emma. So Charlie and Donna each get one-fourth of Bill and Anna’s combined property while Emma gets one-half.
Sources of Common Disaster Clauses
A common disaster clause may appear in an insurance policy, a will, or state law. The provision may refer to simultaneous deaths instead of common disasters.
State Law
Many state laws rely on the Uniform Simultaneous Death Act (USDA). The USDA treats a beneficiary who dies within 120 hours of a decedent as having predeceased (died before) the other person—unless the 120-hour rule would result in the state taking an estate.
The District of Columbia and 21 states have adopted the current USDA. Yet, even some states that have not formally adopted the modern USDA, like New York, use a 120-hour survivorship requirement.
Insurance
A common disaster clause for insurance involves selecting one or more alternative beneficiaries. If no provision allowing alternative beneficiaries exists, you may be able to add one.
Wills and Estate Planning
You can include a common disaster clause within a will or trust instrument or rely on survivorship provisions in state laws. If you add a clause, coordinate with your beneficiaries to avoid conflicting will provisions.
Applying the Common Disaster Clause
How would the common disaster clause apply to Anna and Bill’s situation? The 120-hour rule states that if Bill and Anna die simultaneously, Anna legally predeceases Bill, and Bill legally predeceases Anna. What does that mean for Charlie, Donna, and Emma?
The common disaster clause establishes one outcome for all of the following circumstances:
- Anna and Bill both die instantly;
- Bill dies at the scene, but Anna dies two days later at the hospital; or
- Anna dies of disease, and Bill dies in a car accident one day later.
When each spouse legally predeceases the other, each estate retains half of the marital property—because each spouse’s will states that their property (half of the marital estate) passes to the other. So, regardless of the technical order of death, Anna’s estate would pass in three equal parts to Charlie, Donna, and Emma, and Bill’s estate would pass to Emma.
Understanding the Common Disaster Clause
Contact us today if you want to discuss how a common disaster clause might affect your plans or policies. Attorney Andrew Lamkin, along with our experienced team, can ensure your estate plan adequately addresses simultaneous deaths and other unique circumstances.
Andrew Lamkin is principal in the law firm of Andrew M. Lamkin, P.C., where he focuses his practice in the areas of elder law, estate planning and special needs planning, including Wills and Trusts, Medicaid planning, estate administration and residential real estate transactions. He is admitted to practice law in New York and New Jersey.
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