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C. The simple Will.

C. The simple, “reciprocal” Will.

This is what most married couples first think of. Each spouse’s Will is a “mirror image” of the other. IF the combined estates of both spouses total under $1.5 million, this may be all you need. (For those who die in 2004 or 2005, $1.5 million or more in estate value is the point at which federal estate taxes become a factor to be concerned about. More later.)

This kind of Will provides as follows:

1. Naming of Executor – usually the spouse, but there should be an alternate, too.

2. Payment of debts and taxes.

3. Specific bequests of tangible property, e.g., “Cousin Jethro gets my Shakespeare collection.” (What happens if the collection is sold before death? Does Jethro get the cash equivalent instead? Generally not, under state law. But will Jethro want to argue about it anyway?)

TIP: Avoid disputes by adding the simple words, “……. if owned by me at my death.” Then, it is clear there is no bequest at all, unless the property is still owned by the Testator when he dies.

4. Disposition of the remainder (“residue”) of property.

This consists of everything that remains after steps 1 through 3, above. Usually, people want it this way: “If I die first, everything goes to my spouse. If my spouse has already died, all to my descendants, in equal shares, per stirpes.” (Latin for, “If a child dies before the parent, that child’s children split the share.”) The Wills are mirror-images of each other.

People often ask what happens if a beneficiary of a specific sum or item under their Will dies before they do. It is difficult to give a short, general answer – but the situation can lead to a dispute, unless the Testator (Will maker) plans for it. The best solution to this potential problem is simply for the Will maker to name a contingent beneficiary, in case the primary beneficiary does not survive the Will maker. Alternatively, the Testator can specify that if a beneficiary fails to survive, his/her share or item is to be included and distributed with the “residue” of the estate.

A question of many parents with young children is: “What happens if we both die at once?” The answer, of course, depends on whether any planning has been done. The most important planning, however, is practical, not legal. First, have you found a capable and willing guardian for the children? Secondly, are funds available to support them? Without a good answer to both questions, legal advice is not going to help much.

Most simple Wills prepared for parents have a clause to deal with the “common disaster” situation. Each spouse’s Will says, in effect, “All my property to my spouse, IF he/she survives me by at least 30 days. Otherwise, all to the children.” (There’s nothing special about using “30 days,” but the period should always be less than six months. If it is longer, the tax-free status of the property transfer to the surviving spouse could be lost.)

To analyze the result in a common disaster, focus on one parent at a time. Look at the wife; in a common disaster, the husband will not survive her by 30 days. So none of the wife’s property would pass to him. It would pass to the alternate beneficiaries instead -usually, her children.

Now look at the husband’s Will the same way. In a common disaster, the wife will not survive him by 30 days. If his Will, too, requires the spouse to survive for a certain time, then none of the husband’s property would pass to her. Again, it would go to the alternates – the husband’s children.

Often, of course, wife and husband have the same – and only the same – kids. The Wills are mirror images of each other. Then, this explanation has little significance. The couple’s children end up with their parents’ estate no matter how we look at it.

But what if either or both the wife and husband have children from a previous marriage? In that case, their Wills are very often not mirror images. Each spouse has probably brought individual (separate) property into the marriage. Each might want the current spouse to have use of that separate property, too – if the current spouse survives. If the current spouse is already dead, though, each parent might wish to leave that separate property only to his/her “previous” children. It can then make a big difference which spouse is presumed to die first.

Suppose, for example, that the husband already had a son and $100,000 in the bank when he married his second wife. The son is doing well, and does not “need” the money. The husband, therefore, thinks first of his wife in making his Will, and leaves that $100,000 to her, along with everything else. She is the primary beneficiary.

But if the wife is already dead at the time the husband dies, she does not need the money, either. Dad feels that if it works out that way, then he does want his first son to get the cash. It is listed as a separate item in Dad’s Will, and the first son is named alternate beneficiary of that money.

What would happen if husband and wife die together in an accident? The spouses’ Wills have the frequently-used clause, explained above. When the Executor of the husband’s Will begins distributing property, he can obviously see that the wife has not survived for 30 days after her husband’s death. Therefore, she inherits nothing. The husband’s estate is divided among his children, as directed in his Will. The $100,000 bank account has been earmarked for the first son, as the alternate, and it goes to him, as planned. Once again, the Will’s survivorship requirement (“To my wife, IF she survives me by 30 days . . . ) produces the desired result.

Now let’s look at another scenario. Assume the survivorship requirement in the husband’s Will is different. The Will says, “Everything to my wife, IF she survives me.” There is no mention of 30 days. Assume further that an additional survivorship clause has been used: “If we die together, and the order of death cannot be determined, my wife is presumed to have survived me.”

F.Y.I. This arrangement is sometimes a good idea. Why? Because unless property is left to the surviving spouse, the unlimited marital deduction for calculating federal estate tax cannot be taken. If the spouses’ estates are different in size, but total over $1.5 million (in 2004 and 2005), this can result in needless tax. (More later.)

The outcome is different if the wife is presumed to survive. This time, the husband’s Executor is instructed by that clause to distribute property as if the wife were still alive. Never mind that she lived only a minute longer. She takes everything under her husband’s Will, including the $100,000 he wanted his first son to get if the wife did not need it.

Now that money must be formally transferred to the wife – as if she had outlived her husband by ten years instead of a minute. It is lumped in with the rest of her property. Then everything – including the $100,000 – is distributed to her kids, according to her Will. Her Will does not mention the husband’s son by a previous marriage. That son would get absolutely nothing.

Most states have adopted the Uniform Simultaneous Death Act. This law would dictate the order of death when parents die together. But the law is used only when the spouses’ Wills say nothing about who survived whom – or if there are no Wills at all. Each spouse would be treated by the Simultaneous Death Act as though he/she were the survivor. With the other spouse presumed to be gone already, nothing would go from one dead parent to another. This is the same outcome as achieved with the language used in most simple Wills, discussed above.

Note that if there is no Will, property is distributed according to the state law of intestacy. The Uniform Act does not specify who gets what. It pertains to the order of death only. Once that is determined, state law or the Will takes over to control the actual distribution of property.

The Uniform Simultaneous Death Act provides that if an insured person under a life policy and a beneficiary die at once, the insured will be presumed to have survived, unless otherwise provided. In that case, the policy proceeds would go to the alternate beneficiary, so remember to name one.

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