Preventing an estate disaster

THE FACTS: My father and sister perished in a plane crash under circumstances making it impossible to determine the order of death. My sister is survived by her spouse, Joe, and two children. My father’s will leaves his entire estate in equal shares to me and my sister, per stirpes. He was under the impression that his assets would pass to his grandchildren if anything happened to my sister. He was quite adamant that he did not want his assets to pass to Joe. My father’s will also includes a provision stating that if he and a beneficiary die in a common disaster, he would be deemed to have predeceased the beneficiary. My sister’s will leaves everything to Joe.

THE QUESTION: Joe claims that one-half of my father’s estate now passes to him through my sister’s estate and not to my sister’s children because my sister is deemed to have survived my father. Is that correct?

THE ANSWER: Unfortunately with respect to your father’s wishes, the answer is “yes.” As much as your father may have wanted his assets to pass to his grandchildren, as a result of the inclusion of the common disaster provision in his will, Joe will effectively inherit half of your father’s estate along with any assets your sister owned at the time of her death.

HOW IT WORKS: The provision in your father’s will concerning dying in a common disaster with a beneficiary controls here even though it appears to undermine your father’s wishes. Pursuant to that provision, your sister is deemed to have survived your father. That means that half of his assets will pass to your sister’s estate as if she were alive. The assets will then be distributed in accordance with her will. Since your sister’s will leaves everything to Joe, Joe will, in fact, be the beneficiary of the assets passing from your father’s estate to your sister’s estate.

The common disaster provision is one that is often ignored or misunderstood by clients. However, not giving the possible impact of the provision serious consideration when engaging in estate planning is a mistake that can clearly lead to unintended consequences.

If your father wanted to be sure that his assets would not end up in Joe’s hands, the order of death set forth in the common disaster provision of his will should have been reversed. In other words, the common disaster provision in his will should have stated that in the event he died along with a beneficiary under circumstances that made it impossible to determine the order of death, he would be deemed to have survived the beneficiary.

Under that scenario, your sister would be deemed to have predeceased your father. This, in turn, would trigger the per stirpes language in the will that basically provides that if a named beneficiary predeceases the testator, the share of the estate allocated to the predeceased beneficiary will pass to that beneficiary’s children.

The end result of having your father survive your sister would be that the share of your father’s estate allocated to your sister would not be distributed to her estate but would have passed directly to her children.

Since your father’s assets would not have been included in your sister’s estate, they would not be distributed to Joe. Your sister’s wishes as to the distribution of her estate to Joe would be honored since he would still inherit the assets that were owned by your sister at the time of her death. At the same time, your father’s wish that his grandchildren be the beneficiaries of his estate would have been fulfilled.

Issues like the one created by the competing provisions in your father’s will highlight the need to work with an experienced estate planning attorney and illustrate the importance of asking questions to ensure that you understand fully the implications and consequences of every provision in your will.

This article first appeared in the August 22, 2017 issue of the Times Beacon Newspapers.

Linda M. Toga, Esq. provides legal services in the areas of estate planning, probate, estate administration, litigation, wills, trusts, small business services and real estate from her East Setauket office.

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