Wills & Estates: Why The ‘Titanic Clause’ Is Crucial
When an individual chooses to draw up a will, the natural assumption is that they will be the first to pass away. This results in all of one’s assets being passed to most commonly a spouse, or their children, grandchildren and/or other loved ones.
No one is able to predict the future. However, death is inevitable and it is important to be prepared when that time arrives. The ‘Titanic Clause’ is in reference to Ida Straus’ famous refusal to abandon her husband, Macy’s department store co-owner Isador Straus, and leave the sinking ship; the couple ultimately perished together in the famous NorthAtlantic disaster. Several other women chose to remain with their husbands as well, leaving the courts to wade through a variety of legal issues - namely, which spouse died first and how each will is to be dealt with. By including a ‘backup plan’ in a will, the transition of both estates is likely to be a lot smoother.
Explaining The Titanic Clause
The simultaneous death clause, or common disaster clause, was designed for a pair of people who plan to leave all, or some, of their assets to each other. Therefore, this is an extremely popular option among couples who are married. In British Columbia, a lawyer with experience in wills and estates law will be able to include this clause when drawing up your will. As the saying goes, it is better safe than sorry.
Many spouses write their wills with the notion to give all the property at their death to the other spouse. If a spouse does outlive the other, the will usually states that all of the property will then go to their children at the surviving spouse’s death. It is also common to see in wills that a beneficiary must outlive the person who has created the will by a certain number of days in order to get anything at all. However, tragedies can occur and it is practical to plan ahead for those unforeseen events.
Let’s imagine a situation where a husband and wife each have wills, and in their wills they have each left all that they own to each other upon death. The wills further state that if one dies before the other or the surviving spouse does not outlive the other by thirty (30) days, the children become the beneficiaries. However, both husband and wife are killed and we are unable to determine who died first.
Since both wills contain the Titanic clause, the executors can distribute the estates efficiently. Without the clause, proceeding to distribute the estates would be a tougher task, as we would not be able to determine who outlived who. Although we are unable to determine who died first, we do know that neither outlived the other by thirty (30) days; therefore, neither spouse is able to be a beneficiary of the others will. The assets from the estates of both spouses would pass to their children directly.
What If I Don’t Have A Titanic Clause In My Will?
Division 2 of the Wills, Estates and Succession Act (WESA) has reformed the rules regarding survivorship. The new law requires a beneficiary to survive the person from whom he or she inherits property by at least five (5) days. Simply put, if a will does not provide for a longer period of time, the beneficiary must outlive the testator (the individual who had the will created) by at least five (5) days.
Section 5 of WESA deals with scenarios where people die simultaneously or if there exist circumstances where it is uncertain which of them survived the other. Section 5(1) of WESA creates the presumption that each person has survived the other. This is a shift from Section 2 of the Survivorship and Presumption of Death Act which previously operated under the presumption that a younger person has survived the older person. To put this in perspective, we can break down what would happen if each executor were to begin administering the wills of the husband and wife. By way of the presumption set out in Section 5(1) of WESA, each of the husband and wife are presumed to have outlived/survived the other. This creates a wash for legal purposes. Both of the estates will pass directly to the children beneficiaries.
Jointly Owned Property
It is common to see most couples own their homes as joint tenants with a right of survivorship. With this form of ownership, each individual owns an equal interest in the property. If one individual is to pass away, their interest in the asset would pass instantly to the surviving owner. In British Columbia, where it is presumed that each spouse is presumed to have outlived the other in instances of a simultaneous death, the process can become time-consuming and costly. This is due to the fact that as it is presumed that the husband has outlived the wife (and vice versa), all that is effectively achieved is the trading of identical interests in the same asset.
However, the new law provides an outlet. If it is not possible to determine which individual died first, those who are joint owners with the right of survivorship will be deemed to have owned the property as tenants in common. The major difference is that there is no right of survivorship amongst tenants in common. Therefore, if a tenant in common dies, their interest in the property that was jointly owned becomes an asset of the estate and disposed of in accordance with the terms of their will. If it is not possible to determine which spouse died first, each spouse will be presumed to have outlived the other, neither will ultimately receive the other’s shares in the property that was jointly owned, and each spouse’s property will pass to their beneficiaries according to the terms of their wills.