Clauses To Protect the Estate Plan with Appropriate Simultaneous Death Clauses - 4 Clauses (3 Pages)

Clauses To Protect the Estate Plan with Appropriate Simultaneous Death Clauses - 4 Clauses (3 Pages)

-   Simple statement directing that the spouse with the fewer assets be deemed the survivor
 

-   To be included in the Will of the spouse with the larger share of assets: identifies the spouse with the fewer assets and directs that such spouse to be deemed the survivor: 

-   To be included in the Will of the spouse with the smaller share of assets: identifies the spouse with the larger share of assets and directs that spouse to be deemed to predecease the spouse with the lesser share of assets

-   Where appropriate, to be included in the Wills of both spouses: assumes that the relative shares of assets of the spouses are roughly equal and does not create a presumptive survivor

While the simultaneous deaths of family members are admittedly a rare occurrence, they do sometimes happen. Such tragedies as auto and airplane crashes, home fires and explosions, etc. make it important to address the possibility of simultaneous death in every well-drafted Will. The laws of most states follow the Uniform Simultaneous Death Act which presumes that a person must survive another by 120 hours to be deemed to be the survivor. However, all of the states allow a Will to vary and/or override the presumption contained in the law, and set forth the testator’s own plan.

There are two important issues to address in these clauses. First, consider the relationship between the spouses. If the estate plan creates a credit shelter trust for the surviving spouse, look at the relative assets of the spouses. If they are approximately equal, planning suggests that neither spouse should be presumed to survive the other, so that each spouse’s assets can pass to children and take full advantage of the credit shelter tax savings opportunity. If one spouse’s assets passed to the other spouse as the deemed survivor and qualified for the marital deduction, the entire family assets would pass by the estate plan of the deemed survivor, and only one spouse (the survivor) would be able to utilize the credit shelter opportunity. Conversely, if the assets of the spouses are not equal, planning suggests that the spouse with the fewer assets be deemed the survivor, to allow the first deemed decedent to utilize the credit shelter in his or her Will, but pass assets to the “poorer” spouse to fund the marital deduction for that spouse, and allow that spouse to also utilize the credit shelter, thus assuring the maximum possible use of the credit shelter over two deaths.

The second important use of these clauses is to protect the estate of a decedent from passing through multiple estates of children, who may also perish in the same tragedy as their parents. By requiring a child to survive a parent by a reasonable length of time in order to be an heir, those children not surviving for the required time period will not be heirs of their parents, and will not have separate estates to be administered and possibly taxed, as well.

(Clause 1) is a simple clause directing that the spouse with the fewer assets be deemed the survivor. (Clause 2) identifies the spouse with the fewer assets, and directs that such spouse is deemed the survivor. This clause should be included in the Will of the spouse with the larger share of assets. (Clause 3) identifies the spouse with the larger share of assets, and directs that such spouse shall be deemed to predecease the spouse with the lesser share of assets. This clause should be included in the Will of the spouse with the smaller share of assets. (Clause 4) assumes that the relative shares of assets of the spouses are roughly equal, and does not create a presumptive survivor. Where this clause is appropriate, it should be included in the Wills of both spouses. Note that Clauses B, C and D also address the amount of time that any other beneficiary must survive in order to be considered an heir. If desired, the length of time indicated here can be varied.

Author:
Steven G. Siegel is president of The Siegel Group, a Morristown, New Jersey - based national consulting firm specializing in tax consulting, estate planning and advising family business owners and entrepreneurs. Mr. Siegel holds a BS from Georgetown University, a JD from Harvard Law School and an LLM in Taxation from New York University.
He is the author of several books, including: Planning for An Aging Population; Business Entities: Start to Finish; Taxation of Divorce and Separation; Income Taxation of Estates and Trusts, Preparing the Audit-Proof Federal Estate Tax Return, Putting It Together: Planning Estates for $5 million and Less, Family Business Succession Planning, Business Acquisitions: Representing Buyers and Sellers in the Sale of a Business; Dynasty Trusts; Planning with Intentionally-Defective Grantor Trusts; The Federal Gift Tax: A Comprehensive Analysis; Charitable Remainder Trusts, Grantor Trust Planning: QPRTs, GRATs and SCINs, The Estate Planning Course, The Retirement Planning Course, Retirement Distributions: Estate and Tax Planning Strategies; The Estate Administration Course, Tax Strategies for Closely-Held Businesses, and Tort Litigation Settlements: Tax and Financial Issues.
Mr. Siegel has lectured extensively throughout the United States on tax, business and estate planning topics on behalf of numerous organizations, including National Law Foundation, AICPA, CCH, National Tax Institute, National Society of Accountants, and many others.  He has served as an adjunct professor of law at Seton Hall and Rutgers University law schools.
The Siegel Group provides consulting services to accountants, attorneys, financial planners and life insurance professionals to assist them with the tax, estate and business planning and compliance issues confronting their clients. Based in Morristown, New Jersey, the Group has provided services throughout the United States. The Siegel Group does not sell any products. It is an entirely fee-based organization.
Contact the Siegel Group through its president, Steven G. Siegel, e-mail: [email protected].