People often name beneficiaries in their wills or trusts and on their financial accounts when they’re doing estate planning. However, those inheritance plans can go awry if the beneficiaries die first. Learn more about the importance of naming a contingent beneficiary, including how they work, how many you can have and the risks if you don’t name one.
What is a contingent beneficiary?
A contingent beneficiary is a person or organization that receives assets from an estate if the primary beneficiary dies or becomes unable to receive the assets. Contingent beneficiaries are backup designees. They are also known as “secondary beneficiaries” because they are second in line for an estate’s assets.
You can name contingent beneficiaries in your will or trust as well as on eligible bank, investment and life insurance accounts. Contingent beneficiaries generally can be anyone you choose, including family, friends and charitable organizations.
Primary beneficiary versus contingent…
This article was written by Lee Huffman and originally published on www.nerdwallet.com