Can your estate plan benefit from a “Titanic clause?”

On Behalf of | Sep 26, 2021 | Estate Planning

One of the reasons that too many people put off setting up an estate plan is that it requires them to contemplate their own death. If you and your spouse are beginning to work on your estate plan, it’s crucial to consider that you could potentially die at the same time or at least within hours or days of one another. 

This can occur in a car or plane crash, if a deadly medical condition strikes them both, they’re victims of an act of violence or perish in a house fire or carbon monoxide leak. None of these is pleasant to think about. The names used to refer to these possibilities in your estate plan aren’t likely to sit well with you either. A common one is a “Titanic clause.” It refers to a disaster in which husbands and wives may perish together. It’s also referred to as a “simultaneous death clause.”

How does it work?

Typically, both spouses will include the same language in their clause stating that if it can’t be determined who died first or if they die within a specified period of each other, the other will be considered to have died first. That allows each person’s assets to move on directly to the alternate beneficiary.

It’s easy to include a simultaneous death clause in your will and potentially in other estate planning documents, and it can save your surviving loved ones time and money. It can also be extended to other family members. If you have a relatively small family, you can each have a similar clause. If no beneficiaries are left, your estate could end up going to a distant relative you’ve never met.

Another option is to designate that a beneficiary must survive you by a specified amount of time before the asset can be disbursed to them. This is called a survivorship deferral.

Every family is unique, and you want an estate plan unique to your family and your wishes and goals for them. That’s why it’s important to understand how probate laws work and how best to craft a plan that works for you and your loved ones.