What it means
Imagine a married couple who die in the same accident, each leaving everything to the other. If it cannot be proved who survived, a court would have no way to tell whose estate received the other's assets first.
The Act removes that uncertainty by supplying a rule. Under the basic rule, when there is no clear and convincing evidence that one person survived the other, each person's property is distributed as if they had outlived the other.
That means each estate passes to its own backup heirs or contingent beneficiaries rather than to the other person. A later version of the Act also requires a person to survive by a short fixed period, commonly 120 hours, before they count as having survived.
The survival rule affects wills, trusts and life insurance. Insurance policy proceeds on the life of one person, payable to another person who is treated as having died first, usually pass to the contingent beneficiary named in the policy.
Without a named backup, the proceeds typically fall into the estate of the insured. For businesses and families, the practical lesson is to name contingent beneficiaries and successors.
Small companies owned by two partners who travel together are a good example, because a buy-sell agreement should say what happens if both owners die at once. A clear plan prevents the default rule from deciding the future of the company.
The Act deals only with the order of death, not with tax or the size of the estate. Provisions in a will or trust that address simultaneous death can override the Act's default, so the documents themselves should always be read first.
Insurance and retirement accounts deserve a particular check, because the beneficiary form usually overrides what a will says. If the named person and the account holder die together, and no backup is listed, the money may end up in the estate and be delayed by probate, which is the court-supervised process of settling an estate.
Reviewing every beneficiary form once a year is a low-cost habit with large consequences.
In practice
Real-world examples.
Example
A husband and wife die in a car accident and the order cannot be shown. His $600,000 estate is treated as if she died first and passes to his chosen backup heirs, while her $400,000 estate is treated as if he died first and passes to hers.
Example
Two co-owners of a surveying firm die in a plane crash. Their buy-sell agreement names the heirs of each owner as sellers and the firm as buyer, so the Act's default is not needed to decide ownership.
Example
A life insurance policy pays $250,000 to the insured's business partner, who dies at the same moment. Because the partner is treated as having died first, the money goes to the contingent beneficiary named on the policy.
Case study
Seen in the real world.
Marlowe & Pike Joinery is an illustrative, fictional two-owner company whose founders flew to a trade fair on the same small aircraft. Their wills each left the business to the other, and neither had named a backup.
A tragic accident left no evidence of who died first. The estate lawyer applied the state's simultaneous death rule, which treated each founder as having died before the other, so each half of the company passed to the owner's own relatives instead of looping back and forth.
The relatives had never worked in the business and disagreed on its future, and the company lost key customers during the delay. The illustrative lesson is that the Act gives a clean legal answer, but it cannot give a good business answer unless the owners have planned succession in advance. Both families agreed to a short mediation, and the company was eventually sold to a competitor, with the proceeds divided under the wills rather than by the owners' wishes.
Watch out
Common mistakes.
- Assuming the oldest or the larger estate holder is treated as dying first, when the Act treats each person as having died before the other for the purpose of their own property.
- Thinking the Act replaces a will, when it only supplies a default rule that wills and trusts can override.
- Ignoring contingent beneficiaries on insurance and retirement accounts, which leaves the proceeds to be decided by the default rule or by the estate.
Questions
People also ask.
Does the Act apply if the deaths are days apart?
Not usually, because once a person survives by the required period they are treated as having survived, and the ordinary rules of inheritance apply.
Why does the survival period exist?
It prevents property from passing to someone who survived only briefly and then triggering a second round of probate costs for a second estate.
Does it affect tax?
Indirectly, because who is treated as inheriting can change how estate taxes apply, so an estate adviser should review the position.
From the founder's library
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