Contingent Beneficiary

A contingent beneficiary serves as a backup to the primary beneficiary of assets distributed by a trust or other financial agreement. This secondary beneficiary receives the assets in question in cases where the primary beneficiary is unreachable or has died before the assets would be distributed to them.

What is a contingent beneficiary?

A trust, will, life insurance policy, or other type of estate planning document must have at least one beneficiary listed in order to be executed. These documents typically identify one or more beneficiaries as the primary recipients of the assets to be distributed. In cases where major life changes mean assets cannot be distributed to one or more of those beneficiaries, some estate planning documents identify contingent beneficiaries to receive those assets instead.

Once a primary beneficiary has been confirmed as deceased or unreachable, the trustee or administrator of the estate will contact contingent beneficiaries as necessary to ensure the assets are properly distributed.

For more information on different types of beneficiaries and their role in your estate planning process, check out LegalZoom’s complete guide to contingent beneficiaries.

FAQs 

Should you always have a contingent beneficiary?

A contingent beneficiary isn’t required when setting up a will or trust, but it’s a good idea to include them just to be safe. You never know when a person might die unexpectedly, or change living situations in such a way that getting their assets to them is impossible. When planning your estate, it’s a good practice to plan for these unlikely scenarios.

Who should I choose to be a contingent beneficiary?

There are no specific rules about who can serve as a contingent beneficiary, but typically if a primary beneficiary has children, those children will be named as multiple contingent beneficiaries. Other common choices include more distant family members or organizations to which the owner of the estate has some connection.

A good rule to follow when selecting primary and contingent beneficiaries is to select as many contingent beneficiaries as primaries to help ensure the assets are distributed completely.

How does a contingent beneficiary receive their inheritance?

Once it’s been determined the primary beneficiary is no longer able to claim the assets left to them, the contingent beneficiary will inherit assets just as the primary recipient would as determined by the insurance company or estate administrator. This holds true whether the assets are financial accounts, retirement accounts identified in the will, or the death benefit from a life insurance payout outlined in their policy.

What happens if a primary beneficiary reappears after assets have already been distributed to their contingent beneficiary?

While unlikely, it’s not impossible for a formerly unreachable primary beneficiary to resurface at a later date after the contingent beneficiary has already received their inheritance. These types of cases can be tricky and should be approached with the assistance of a qualified estate attorney to navigate the legal process.

Typically the primary beneficiary will not be eligible to receive the assets unless they can prove some type of fraud or negligence on the part of the estate administrator during the probate process.