(photo courtesy of http://ultimateclassicrock.com/survivor-eye-of-the-tiger/)

If you have a Will, you may have noticed some seemingly nebulous language like this:

No beneficiary named herein shall inherit from my estate unless she has first survived me by at least 30 days. Otherwise she shall be deemed to have predeceased me for all purposes of this Will.

Wait, she can’t inherit anything until month after he’s gone because his Will says so? What’s up with that? It’s actually a pretty good thing if it’s y our Will. Here’s the skinny:

What is a “Survivorship” Clause?

A survivorship clause makes sure that your Will – and not someone else’s – runs the show. Without a survivorship clause, property left to a beneficiary who dies in a “common tragedy” with you (i.e. a car accident) could pass under that beneficiary’s Will, rather than yours.

A Totally Made Up But Very Illustrative Example:

Rocky’s Will leaves everything to Adrian with no survivorship requirement. Adrian’s Will (unbeknownst to Rocky) leaves everything to Clubber. Rocky and Adrian are involved in a car crash that kills Rocky at the scene and puts Adrian in ICU. Two weeks later, Adrian dies. Guess who just inherited Rocky’s goodies?

Yep, CLUBBER.

I pity that fool, Rocky.

Had Rocky simply required that Adrian survive him by a longer period of time (i.e. 30 days), Clubber wouldn’t be partying on the rough streets of Chicago with all Rocky’s estate. More likely, Rocky’s son Robert would have been the sole heir (sorry Paulie) and Rocky’s estate would have stayed in the family.

Is There a Minimum Time Requirement?

Sometimes. Notice that, in our example, Adrian lasted two weeks before checking out. Some states have a time period to survive set by law. Texas, like many other states, will not permit a beneficiary to receive property from a Will or Trust until he or she has survived at least 120 hours. So note, a survivorship clause may be inappropriate if the beneficiary will need a gift very soon after the Will Signer’s (aka the “Testator”) death. Note also that a good survivorship clause can avoid some tax consequences on generation-skipping transfers (a.k.a. the “GST” tax) as well. See our article on GST tax for more on that.

How Long Should My Beneficiary Have to Survive?

A survivorship period should be long enough to eliminate problems that are the result of a common disaster. The Uniform Probate Code created that 120 hour rule mentioned above, but there is nothing magic about it. Just make sure it’s not too long; the beneficiary cannot receive any distribution until the survivorship period expires. Assume Adrian survives and needs money from Rocky’s estate to pay for medical bills, lost wages from the pet store, etc. She doesn’t need to be waiting around for an unreasonable amount of time.

Are There Additional Rules for a Surviving Spouse?

One other big one. If your surviving spouse has to wait too long before receiving property under your Will (generally speaking, more than six months) it could disqualify them from any applicable marital deduction even if they are otherwise made in a qualifying trust or outright gift. So Rocky wants to make Adrian wait, but not too long. Otherwise, she may miss any applicable marital deduction. Get mama the goods, pronto!

The Bottom   Line.

Survivorship clauses can help lock your wishes in and solidify your estate plan, but make sure you run it past your professional advisor or attorney. Otherwise, the unwary survivorship clause may get the estate caught – in the eye of the tiger!

The IRS.

The “tiger” is the IRS.

See? Who says estate planning can’t be fun!

*sigh*

DISCLAIMER: Blog posts are intended for educational purposes only and are not a substitute for legal advice. No comments or responses will create an attorney-client relationship and will not be protected under the attorney-client privilege. Consult a licensed estate planning attorney for your estate planning needs.

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