Planning the Unplannable: Estate Planning and Suicide
Ernest Hemingway once wrote, “Every man’s life ends the same way. It is only the details of how he lived and how he died that distinguish one man from another.” Recently, the deaths of Anthony Bourdain and Kate Spade have shocked the world; like Hemingway, the two stars committed suicide.
Bourdain, the star of Parts Unknown on CNN and Spade, a top-of-the-line clothing designer, had little in common other than fame. Yet, their lives ended in similar ways only days apart.
Hemingway’s quote, unwittingly, makes a significant point about probate administration. Death treated the two stars equally as will the probate laws. But, Hemingway’s quote also leads to another topic: suicide and its effect on estate planning.
The details of how the two stars lived, and how they planned their estates, will distinguish the administration of those estates. How does suicide effect an estate plan to secure a smooth transfer of wealth to the next generation?
Thankfully, if an individual effectuates a proper will or trust in their lifetime, suicide will not impact their estate plan. An appropriate and proper estate plan provides for the transfer of the objects of a person’s bounty at death.
The manner of death, in contrast to Hemingway’s proposition, is not relevant to administering a properly executed estate plan. There are, however, some exceptions. One glaring exception comes to mind: life Insurance.
In the context of life insurance, the facts of an individual’s death may affect payment of the death benefit, particularly with regard to suicide. Life insurance policies are binding contracts. Therefore, the terms and conditions of the contract convey the benefits.
A life insurance contract contains the terms of the agreement between the carrier (the life insurance company) and the named insured (the person buying the life insurance policy). The contract also functions to name a beneficiary; the person entitled to receive payment of the death benefit. In an effort to minimize risk, many life insurance policies contain a suicide exclusion clause.
Suicide Exclusion Clause
A suicide exclusion clause is a contract term which operates to void the payment of life insurance benefits to the beneficiary if the named insured passed away as a result of suicide. This becomes particularly problematic when the named insured’s estate plan provides for life insurance benefits to be distributed in a particular way.
Enforcement of a suicide exclusion clause can be challenged in cases of assisted suicide. Some policies have sunset clauses on the suicide exclusion clause. After owning the policy for a given period of time, benefits are paid even in the event of a suicide.
However, as seen in the Bourdain and Spade cases, suicide is not something people take into account in their estate plans. Suicide occurs for a number of reasons; the question of why plagues survivors of the deceased.
Suicide is a tough painful subject. Nevertheless, we recommend taking a close look at your life insurance contract to determine the scope of your coverage.
We Can Help
If you have questions about life insurance, probate, estate planning, and/or the process please contact our office to schedule a free consultation. We can assist with your estate planning goals.
There is Hope
If you or a loved one needs help, please contact the resources below. These resources are confidential and free.
National Suicide Prevention Lifeline – Call 1-800-273-8255.
This lifeline provides 24/7, free and confidential support for people in distress. The lifeline has information about prevention and crisis resources along with best practices for professionals.
Crisis Text Line – Text CONNECT to 741741.
Sending a text in the United States connects the caller to a trained counselor ready to listen.