Monday, July 7, 2014

What Do You Mean She Did Not Survive? Survivorship in the World of Estate Planning

Without fail, every week or so a client will give me the look.  Akin to Gary Coleman on Different Strokes, what I call "the Wathcha' Talkin' About Willis? face.  You remember, this one:

Behind the look is an air of confusion, annoyance and frustration.  These are the type of conversations that place unfavorable adjectives in front of the title lawyer.  Case in point:

Client: My wife died on Sunday, her sister died Thursday, so my wife outlived her and is the beneficiary of the sister's IRA.

Attorney: Well, your wife died after her sister, but she may not have actually survived her, it depends.

Client: [intent pause, brow wrinkles, and they are clearly holding back the statement -- now I thought you were suppose to be smart, you went to law school, and now your tellin' me that my wife did not survive her sister, come on, pay attention] -- what? is the question they toss my way.

Attorney: In the world of estate planning we have a concept called survivorship, it requires an heir to outlive the decedent by a certain amount of time in order to actually live long enough to inherit.  If they die too soon, they are considered to have predeceased and the asset passes as though they had died before the decedent.

Client: what?

Attorney: the thought is that you want your assets to pass to another person, but control what happens if they die before you.....or too soon after you.

Client: okay, so how long did my wife have to outlive her sister?

Attorney: that depends on the situation.

Client: Are you kidding me! Can't you give me a firm answer?

Attorney: No.  In Wisconsin the statutes require an heir to outlive the decedent by 120 hours (5 days) before inheriting, unless a will sets a different time frame such as 30, 60 or 90 days.  But this is an IRA, which is non-probate property, meaning the contract with the financial services company controls.  We need to know, under the contract, what time frame applies.  Do you have a copy of the contract?

Client: No, why would I, it belonged to her sister.

Attorney: Can you get one from the company -- you are a suspected heir since you survived your wife.

Client: [Head falls into their hands] -- why does this have to be so hard?

Attorney: I'm sorry that it is, but I can try to make this easier for you. There is a reason I keep Frango Mints in the waiting room, everyone needs a treat after talking with a lawyer about illness, death and taxes.

Lessons learned: 1) dying second does not necessarily mean a person stands to inherit under a will or beneficiary form.  Timing will likely play a key role.  Did the 2nd to die live long enough after the 1st to actually inherit.  2) hard copies of financial agreements can save countless hours for loved ones left behind to sort out the path an asset will take after death.