While you could probably jump online and create a will in just a matter of minutes, right from the comfort of your own home, it is important to know that not all succession plans are created equally. In fact, these simplified estate plans do not typically account for specific state laws or other unique circumstances, such as heirs that pass away shortly after you do. For these situations, a special plan is needed – a Titanic clause – and everyone should have one.
It Can Happen to You
Think of some of the biggest celebrities – Zsa Zsa Gabor’s son, whose son passed away a week after her and Carrie Fisher, who passed away just one day before her mother. Then consider the possibility that you and your beneficiary pass away at the same time in a devastating or catastrophic event. It can happen. It does happen, and far more often than most people realize, which is why it is best to be fully prepared.
What is a Titanic Clause?
Backup succession plans, which are sometimes referred to as Titanic clauses, account for unique circumstances that may lead to lengthy delays, probate problems, and a depletion of your estate. The most commonly used plans include survivorship deferrals, default beneficiaries, and simultaneous death clauses. Each one acts differently and is used for different circumstances.
Simultaneous death clauses are used to address when two parties with an intertwined estate pass away at the same time. They determine who should be considered as the “first departed,” and who is to be regarded as the second to pass. In some cases, this can mean the difference between assets going to an heir of your choosing, or an heir of your spouse’s choice.
Survivorship deferrals are used to deal with the death of heirs that occur shortly after yours. Essentially, they state that your heir must survive for a specific amount of time, or your estate will go to a contingent beneficiary. The purpose is not just to save your estate; it is to plan for the possibility that your heir may not have the time to prepare an estate plan of their own.
Complete Armageddon plans are used to address issues in which all your immediate successors have died before your estate is disbursed. It essentially places a mark in your plan that states at what point your assets go to a non-profit or favorite charity. The idea is that your estate will not go to a long-lost, distant relative whom you do not know and have never met.
Using Titanic Clauses in Your Estate Plan
Succession planning is far more complicated than online DIY options and fly-by-night will creation options can accommodate. As such, it is highly suggested that estate planners – particularly those with a high net worth – contact an experienced and dedicated professional. Not only can this ensure that state and federal laws are considered, but it also helps ensure you have considered all possible scenarios for your estate plan.
At the Law Offices of Rollie R. Hanson, S.C., we offer personalized and tailored services to suit your estate planning needs. Our Milwaukee estate planning attorneys look at the big picture and use creative approaches to help you take a proactive approach to common estate planning problems. Learn more about how we can assist you. Call 414-321-9733 and schedule your consultation today.