Common Disaster Provisions
A common disaster provision is a clause in an estate planning document or insurance policy that specifies how assets will be distributed if the insured and the primary beneficiary die simultaneously or within a short period of time. This can be important to avoid probate costs and estate taxes, and to ensure that assets are distributed according to the insured’s wishes.
How it works
A common disaster provision typically specifies that the primary beneficiary must survive the insured by a certain period of time in order to inherit the assets. If the beneficiary does not survive the insured by the required period of time, the assets will pass to a contingent beneficiary.
For example, a common disaster provision in a will might state that the primary beneficiary must survive the testator by 30 days in order to inherit the testator’s assets. If the beneficiary dies within 30 days of the testator, the assets will pass to the contingent beneficiary.
A common disaster provision in an insurance policy might state that the primary beneficiary must survive the insured by 24 hours in order to receive the policy benefits. If the beneficiary dies within 24 hours of the insured, the policy benefits will pass to the contingent beneficiary.
There are several benefits to having a common disaster provision in place:
- Avoids probate costs and estate taxes. If the insured and the primary beneficiary die simultaneously, the assets will pass directly to the contingent beneficiary, which can help to avoid probate costs and estate taxes.
- Ensures that assets are distributed according to the insured’s wishes. If the insured has a specific preference for how their assets should be distributed, a common disaster provision can help to ensure that their wishes are followed even if they and the primary beneficiary die simultaneously.
- Avoids conflict and confusion among the surviving family members and heirs. If the insured and the primary beneficiary die simultaneously, it can be difficult or impossible to determine who died first. This can lead to confusion and conflict among the surviving family members and heirs. A common disaster provision can help to avoid these problems by specifying who will receive the assets.
Who should have a common disaster provision?
Anyone with a beneficiary should consider having a common disaster provision in place, especially if the beneficiary is a spouse, child, or other close family member. This is because the likelihood of two close family members dying in the same event is higher than the likelihood of two strangers dying in the same event.
How to create a common disaster provision
To create a common disaster provision, you should consult with an estate planning attorney. An attorney can help you to draft a provision that is tailored to your specific needs and goals.
Conclusion
A common disaster provision is an important tool that can help to protect your assets and your loved ones in the event of a tragedy. If you do not have a common disaster provision in place, you should consult with an estate planning attorney to discuss your options.
