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Common Disaster Clause

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The purpose of a common disaster clause is to establish a plan should multiple individuals die in a common disaster. Common disaster clauses are often seen in the estate planning context and the insurance context. 

Common Disaster Clause in Estate Planning

In the context of wills and estates, a “common disaster clause" is a provision that addresses the situation where multiple individuals, such as spouses or beneficiaries, pass away simultaneously or within a short period of time, and it becomes necessary to determine the distribution of assets or the order of succession. A common disaster would be a set of circumstances or a single accident in which two individuals die apparently simultaneously, often resulting from auto accidents, extreme weather situations, fires, plane crashes, and other unforeseen incidents. 

These provisions are sometimes also referred to as “survivorship” or “simultaneous death” clauses. The clause typically outlines the order of survivorship or alternative distribution methods to ensure that the assets are distributed according to the wishes of the testator (the person making the will). 

Situations such as these might arise where a married couple both pass away due to a car accident where they were riding in the same vehicle, or in the case of a house fire or weather event where they were both home at the same time as the incident.

Common Disaster Clause in Life Insurance

Within the life insurance context, a common disaster clause is a provision that addresses the same scenarios as above, where both the insured and the primary beneficiary of the policy die simultaneously or within a short period of time. Its purpose is to establish an order of succession or alternative beneficiaries in case the primary beneficiary is unable to receive the policy benefits due to their simultaneous death with the insured. 

Typically, a common disaster clause in an insurance policy will specify one or more contingent beneficiaries who would receive the policy proceeds if the primary beneficiary dies in a common disaster with the insured. Sometimes, an insurer will require that the primary beneficiary survive the policy holder by a certain length of time in order to qualify to receive the benefits; although they would have already died by this point, qualifying them to receive the benefits allows those assets to pass through their estate, instead of going to the next named beneficiary. 

Examples of common disaster clauses

Standard Boilerplate Common Disaster Clause Example

Example: If, at any time, no person designated in this Will (including any trust established herein) to receive any portion of my estate is living, so that the disposition of any portion of my estate is not provided for by this Will, such property shall be distributed to [name(s) of individuals/charities] [OPTIONAL] (if Multiple Contingent Beneficiaries): as follows: [proportions in percentages or fractions (e.g., 1/3 to [name of individual beneficiary], 2/3 to [name of charitable organization])].”

Use this generic version in an estate planning document to designate contingent beneficiar[ies], should a common disaster result in a failed gift to the primary beneficiar[ies]. 

Common Day Disaster Clause Example

Example: “If Settlor and Settlor’s spouse die under circumstances such that it cannot be determined which of them survived the other, or if Settlor’s spouse does not survive Settlor by [specify period, e.g., 180] days/hours, then, for purposes of any gift in trust to Settlor’s spouse hereunder and notwithstanding any provision of this Agreement, any statute, or any rule of law to the contrary, Settlor’s spouse shall be considered to have survived Settlor, [OPTIONAL]: but only to the extent necessary to assure passage to Settlor’s spouse of the minimum amount necessary to assure that Settlor’s spouse’s estate and Settlor’s estate shall be taxed in the same marginal federal estate tax brackets, determined as if Settlor’s spouse had died immediately after Settlor’s death and Settlor’s spouse’s estate were valued as of the date on, and in the manner in which Settlor’s estate is valued for federal estate tax purposes. The Trustee shall accept the statement of Settlor’s spouse’s Personal Representative as to all information required in complying with this provision without inquiring into any such information and the Trustee’s administration based upon such information shall not be subject to question by any beneficiary.”

Sometimes, if there is a common disaster that causes the simultaneous deaths, it might not be easy to identify which spouse survived the other, especially if they are discovered already deceased, such as after a house fire or major weather event, like a hurricane or tornado. This clause makes certain that the settlor’s spouse will still be treated as if they survived the settlor for purposes of asset distribution and valuing the estate. 

The optional portion at the end of the clause allows for further instruction regarding the timing of estate valuation for tax purposes. If estate tax values are not the main concern of the will, this part can be omitted. 

Common Day Disaster Clause - Insurance Policy Example

Example: “If the insured and primary beneficiary die in the same accident, the policy will pay as if the insured died last. The primary beneficiary must survive (outlive) the insured for [30] days.” 

In an insurance contract, under the common disaster provision, a certain period of time is designated so that, even though both the insured and the beneficiary died as a result of the same accident, it is possible to determine that the beneficiary died last and policy disbursements would be distributed accordingly. 

This example clause stipulates for a 30-day survivorship period. If the policy belongs to Spouse A, and if Spouse B died on or before the 30th day after Spouse A’s death, Spouse A will still be treated as if they died last and the proceeds would be disbursed according to Spouse A’s beneficiary instructions. However, if Spouse B dies on or after the 31st day, Spouse B will be deemed to have survived Spouse A, and the proceeds from Spouse A’s policy will go directly to Spouse B’s named beneficiary (which might be through Spouse B’s will). 

Uniform Simultaneous Death Act - Acknowledgement

If there is no will or trust, or no “common disaster” clause in a relevant document, The Uniform Simultaneous Death Act (USDA) steps in and creates a default rule that one person must survive another by 120 hours to avoid disputes caused by simultaneous or quickly successive deaths of persons between whom property passes at death. The provisions of this act are also incorporated into the Uniform Probate Code. 

Notably, the USDA does not require that the individuals die from the same cause (i.e. husband and partner die in the same car accident) for the default rules to apply, but rather solely looks to the timing of the deaths (i.e. husband dies in a car accident in California and partner died in separate airplane crash hours apart). 

While nearly every state in the U.S. had adopted the original 1940 version of the USDA, only about 21 states have adopted the revised version from 1991 that includes the 120-hour requirement. The states that have not adopted the USDA have either implemented their own time requirement for survivorship, or, such as in the case of Illinois, have statutes that provide that the property of each person shall be distributed as if each one had survived the other. This type of statutory language can cause confusing or unintended outcomes. 

Why a common disaster clause is important

As mentioned above, if a situation arises in which an estate planning document or insurance agreement does not contain one of these provisions, courts may apply default rules or statutes, which vary by jurisdiction which could greatly subvert the original intent of the testator/insured.

Amending a common disaster clause

If your estate plan already includes a common disaster or simultaneous death provision, there are a few considerations before you modify or remove it. 

If your life insurance policy has a standard rule requirement for the survival time, you might not be able to amend that. Each policy is different and you’ll have to check with your insurer about any requirements or rules they follow for qualifying beneficiaries. Once you do that, you will be able to incorporate those rules, if any, into your estate plan. You can also tailor your after-death asset distribution by changing or adding contingent beneficiaries to the life insurance policy itself. 

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