When estate planning, it's important to consider all potential beneficiaries of your estate. But what happens if a beneficiary is unable or unwilling to inherit? That's when you designate a contingent beneficiary. A contingent beneficiary is someone who will inherit your assets if the original beneficiary cannot or does not want them. So, who should be your contingent beneficiary? And how do you go about naming one? Read on for answers to these questions and more.
What Is a Contingent Beneficiary and What Does It Mean for Your Estate Plan?
When you create a trust or will, you may designate a contingent beneficiary. This is the person (or persons) who will receive your assets if your primary beneficiary dies before you do.
For example, let's say that you have two children, and you want them to inherit your estate equally. However, you are concerned that one of them may die before you do. In this case, you could name the other child as the primary beneficiary, with the remaining child as the contingent beneficiary. That way, if the first child dies before you do, the second child would still inherit your estate.
Naming a contingent beneficiary is a way to ensure that your assets will go to the person (or persons) you want them to, even if something happens to the primary beneficiary. It's important to keep in mind, however, that contingent beneficiaries only come into play if the primary beneficiary dies before you do. If both beneficiaries are alive when you die, they will each inherit an equal share of your estate.
What Happens if You Don't Have a Contingent Beneficiary Designated in Your Estate Plan?
If there is no contingent or secondary beneficiary, the assets will be distributed according to state law, which can vary from state to state. In most cases, the assets will go to the deceased person's spouse or children. However, if the deceased person was unmarried or had no children, the assets will go to his or her parents or siblings. In some cases, the assets may go to a more distant relative. If there are no living relatives, the assets will go to the state. As a result, it is important to carefully consider who you name as a beneficiary in your estate plan.
How Can You Change or Update Your Estate Plan to Include a Contingent Beneficiary?
To name or update a contingent beneficiary, you will need to make a new will or other legal document that specifically names the contingent beneficiary and outlines what should happen in the event that they inherit your property. Once this document is in place, you can rest assured knowing that your estate will be taken care of exactly as you wish, even if something happens to the primary beneficiary.
If you need to make a change to your estate plan, an experienced attorney can help you update your documents and make sure your wishes are properly carried out. Making the changes yourself could result in unintended consequences, such as the wrong beneficiary receiving the wrong assets.
What Are the Benefits of Having a Contingent Beneficiary in Place for Your Estate Plan?
There are several benefits to having a contingent beneficiary in place. First, it ensures that your assets will go to the person you want them to go to. If something happens to your primary beneficiary, you can rest assured that your assets will still end up in the hands of someone you trust. Additionally, naming a contingent beneficiary can help to avoid family conflict. If there is any disagreement about who should inherit your assets, having a contingent beneficiary in place can help to prevent heated arguments and possible litigation.
If something happens to you and your primary beneficiary before you have a chance to update your estate plan, having a contingent beneficiary in place can help to ensure that your assets are distributed according to your wishes.
Contact an Estate Planning Attorney Today
If you are creating or reviewing your estate plan, it's important to consider who you would like to be your contingent beneficiaries. Contact us at Heritage Law Office at 414-253-8500 or send us a message if you have any questions about contingent beneficiaries or would like help drafting or updating your estate plan.