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Wills and Estates: Common Disasters |
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If a husband and wife each make the other the beneficiary of their estates, what happens if both die in a car accident?
In the case of assets owned jointly, such as real estate held as joint tenants, and joint bank accounts with a right of survivorship, if one outlives the other even for a short period, then the joint assets will go to the estate of the one who lived the longest.
If both die at the same time, or it is unknown who lived the longest, then the law deems the younger to have lived longer than the older. The joint asset then goes to the estate of the youngest.
Lawyers often suggest that a clause be inserted in a Will to provide that a beneficiary must outlive the maker of the Will for at least 30 days. If the beneficiary dies within this 30 days period, the gift that would have gone to the beneficiary is then given to someone else. For example, a husband might provide that his estate will go the his wife if she survives him for 30 days, and if she dies before him or within the 30 days period, his estate will be divided among his children. This way if his wife survives him by only 5 days, then his estate will go directly to his children, instead of to his wife's estate. The 30 days period has become conventional, but a different period can be used.
A thirty days clause in a Will does not apply to the joint assets that pass by right of survivorship. If two joint owners have mirror image Wills, with the same people named as beneficiaries in case of the death of both joint owners, then the same people will inherit the joint assets. However, if each joint owner has named different beneficiaries in his or her will, then who ultimately inherits the joint asset will depend on which of the joint owners dies first, or which of the joint owners is the youngest if the deaths occur at the same time or if the order of deaths is unknown. Accordingly, it is important to consider all of the implications carefully before holding assets jointly with a right of survivorship.
Different rules apply to life insurance. In British Columbia, the Insurance Act provides that if a person whose life is insured and a beneficiary of the life insurance die at the same time or if it is unknown who died first, the beneficiary is deemed to have died first. If no alternate beneficiary has been named, the proceeds go to the owner, or the owner's estate.
The survivorship presumptions used for life insurance can lead to an interesting paradox. If a wife owns a life insurance policy on her life, and names her younger husband as the sole beneficiary, and both die at the same time, then the proceeds of the life insurance will go to her estate. But if she names her husband as the beneficiary of her estate in her will, and she has not put in a 30 days clause (or some other clause with a similar effect), then the insurance proceeds will go through her estate to her husband's estate under her will.
By Stanley Rule of Tinker, Kueng, Churchill and Co. |
