When an individual authors a will or plans how their estate’s final affairs are to be handled, many issues must be resolved. One such consideration that often arises is the designation of beneficiaries (persons who receive the decedent’s assets). During the process of designating beneficiaries, someone might need to identify a contingent beneficiary.
A Contingent Beneficiary Defined
An individual designated a contingent beneficiary receives the proceeds of a deceased person’s assets in the event the primary beneficiary cannot.
People who hold monetary assets such as banking, investment, and retirement accounts are typically given the liberty to name a primary beneficiary or beneficiaries who will receive the contents of these accounts upon the owner’s passing.
The Reasons Why Contingent Beneficiaries Might be Designated
In certain instances, circumstances might arise where the primary beneficiary is unable or unwilling to access or accept the financial reward said individual was chosen to receive.
For example, a primary beneficiary might die before the account holder. In other cases, the primary designee might not accept the reward. Such occasion might arise if primary designee and account holder had a personal falling out and are no longer on speaking terms.
The Importance of Contingency Beneficiary Designation
If the primary designee cannot or will not accept the funds or assets, the future of the decedent’s personal property might be decided by individual state courts and be subjected to a legal process known as probate, which could last for many months or years depending upon the size and complexity of the deceased individual’s estate.
Individuals Eligible to Receive Contingent Beneficiary Designation
There are few restrictions regarding who an account holder can name as a contingent beneficiary. In many instances, a primary beneficiary will be a spouse or child. Contingent designees can be any individual over 18. Additionally, a contingent designation may be bestowed upon estates and trusts.
Amending Contingent Beneficiary Designation
Typically, most financial institutions will allow an account holder or asset bearer to change such designations. That said, the amendment will need to be made in writing by completing the institution in questions mandatory forms.