It is a scenario most people would rather not think about, let alone bring up with a financial advisor or estate lawyer: What happens if a couple, or even an entire family, were to die at the same time?
When planning wills with her clients, "I'm always the person who brings up the subject," said Carol Bezaire, senior vice-president of tax and estate planning at Mackenzie Financial in Toronto.
"I ask people: If they are going to leave everything to their spouse, how many times are you in the car together? What happens if the two of you either die together or are disabled together, and you have named each other in your will, or named each other as your power of attorney?"
There is a clause that covers such contingencies. It's often referred to as the Titanic clause, and it comes from Ida Straus's famous refusal to abandon her husband, Macy's department store co-owner Isador Straus, and leave the sinking ship. The elderly couple died together in that maritime disaster.
Among estate-planning professionals, however, the provision is usually known as the common disaster or simultaneous death clause.
"Any lawyer who is preparing a will, and is a professional in wills and estates, will have that clause inside of both wills," said Jamie Golombek, managing director of tax and estate planning with CIBC Private Wealth Management.
Without it, things can get messy, advisors say. An already difficult time will be made worse by added complexities and costs, and even potential disputes.
Adding to the complication is the fact that in Canada, the provinces and territories offer differing provisions when the will doesn't specify what its writers wanted to see happen. In Ontario and British Columbia, when an accident or disaster takes the lives of both spouses, neither is deemed to have survived the other. Assets go directly to their heirs.
Paul Taylor, an associate in the Ottawa office of Borden Ladner Gervais LLP, pointed out another potential issue. He cited the example of spouses whose wills mirror each other, leaving everything to the surviving spouse, but if one is predeceased by the other, then everything is left to other heirs and charity. "In both cases what you have is a Plan A and a Plan B," he said.
"For example, Plan B could say, '$5,000 goes to charity and the rest goes to my children.' The problem when you have simultaneous deaths is that neither spouse's Plan A happens. The Plan Bs happen, and the bequest to charity is triggered in both wills.
"For wealthy couples, with, say, a million-dollar bequest within their Plan B, the heirs would see $2-million go to charity, rather than the originally intended amount."
High-net-worth individuals also need to take into account what happens to their assets if both parents die simultaneously and no provision has been set up for putting the money in a trust for their children.
This is an area of concern for wealthy Canadians, said Ms. Bezaire. "People with a large amount of wealth don't think that their heirs will be able to handle that much wealth all at one time."
If there is a fair amount of money, at what age should a child get access to it? Without that kind of provision, children would automatically inherit regardless of their age. Mr. Taylor said, "Whenever there are children under 18 involved, we always make sure that it gets put into a trust for them."
Another potential wrinkle in simultaneous death: What happens if one of the persons is the executor of the other's will?
Without a backup plan, the second person's executor would have to deal with two wills should death occur in provinces where one is deemed to have survived the other.
"That's why, when we are planning, we tend to want at least one alternate executor so you don't end up in that situation," said Mr. Taylor. "Instead, you end up in a situation where you have that person you chose."
"It is just so personal for each individual," Ms. Bezaire said. "Nowadays we've got blended families, step-families or family members in other countries. So people need to make sure their wills really reflect what they want, because nobody can guess."
Even the wealthy tend to put off estate planning, or they disregard unlikely contingencies. Indeed, the more detailed the will, the more it costs to prepare.
But not doing so means "you may end up defeating yourself," said Ms. Bezaire. "It is really important to make sure your will is up to date and reflects what you want."