You and your spouse built a life together. Your estate plan probably assumes that when one of you dies, the other will carry on. But what happens if you die in the same accident or only days apart?
It is an uncomfortable question, but answering it now can spare your family confusion, expense, and unintended consequences.
Why the order of death matters
Leaving everything to each other sounds simple. However, if your spouse survives you and inherits your property outright, those assets may then pass under your spouse’s estate plan when they die.
For a blended family, that distinction can be significant. Property you expected your children to receive could instead pass to your spouse’s children or other beneficiaries, depending on the documents and applicable law.
Some property could also require administration through both estates. Two deaths do not automatically mean two probates, though. Assets properly held in trust or passing through beneficiary designations generally follow different procedures.
What a survivorship clause does
A survivorship clause requires a beneficiary to live for a specified period after your death before receiving an inheritance. For example, your trust might require your spouse to survive you by 30 days.
If your spouse dies two days after you, that requirement would not be met. For the gift governed by that clause, your spouse would generally be treated as having died before you, and the applicable backup instructions would determine who inherits.
That makes naming alternate beneficiaries just as important as choosing a survival period. The clause should clearly address both the timing requirement and what happens if it is not satisfied.
You may have heard that someone must survive you by five days to inherit. In California, the 120-hour requirement generally applies to intestate succession: property distributed under state inheritance law because no valid estate-planning direction governs its distribution.
It is not a universal rule for every trust, will, insurance policy or account. Do not assume that California law automatically supplies the same waiting period throughout your estate plan.
Having a joint trust does not eliminate these questions. Your trust should explain what happens at the first death and how assets are distributed if the other spouse dies shortly afterward.
This deserves particular attention when spouses have children from previous relationships, separate property or different intended beneficiaries.
Life insurance and retirement accounts also need review. A survivorship clause in your trust does not automatically change a beneficiary form naming your spouse individually. Each asset must be considered under the documents and rules that govern it.
Give your family a clear answer. Your family should not have to piece together those answers while grieving. Coordinating your trust, wills, beneficiary designations and asset ownership now helps ensure that your wishes guide what happens next, even when life takes an unexpected turn.
Send your questions to ccolan@colanlegal.com and use “Alpine Mountaineer estate planning question” as the subject. We’ll answer your questions in our upcoming issues.This article is provided by your local estate planning attorney, Corina Colan. The Law Office of Corina I. Colan / (909) 265-3315 / www.colanlegal.com
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