What Is a Contingent Beneficiary?

Naming contingent beneficiaries is important in case your primary beneficiaries can't receive your assets when you die.
Lee Huffman
By Lee Huffman 
Edited by Tina Orem

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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

Cornell Law School Legal Information Institute. Contingent Beneficiary. Accessed May 17, 2023.

Primary beneficiary versus contingent beneficiary

Primary beneficiaries are first in line to receive assets from an estate. Often, people name their spouses as their primary beneficiary and their children as contingent beneficiaries. Generally, you can name as many or as few primary and contingent beneficiaries as you like. You can also split your assets in any ratio you like; beneficiaries don’t have to receive equal shares of your estate.

Why name a contingent beneficiary?

Naming a contingent beneficiary is important because there are many reasons a primary beneficiary may not be able to receive your assets.

  • The primary beneficiary may die before you do. This may happen, for instance, when a parent is a primary beneficiary for an adult child.

  • The financial institutions that house one or more of your accounts may be unable to contact your primary beneficiary after you die.

  • The primary beneficiary may have forfeited their rights to your estate. For example, a primary beneficiary is typically ineligible to receive life insurance benefits if they murdered the policyholder.

Do I need a contingent beneficiary?

Naming contingent beneficiaries is important because if your primary beneficiaries are unable to receive your assets and there are no contingent beneficiaries, your estate may have to go through probate court. There are a few reasons many people try to avoid probate.

  • The probate court may distribute your assets differently than you intended.

  • Your estate may be subject to extra taxes and court costs.

  • Creditors may be able to seize assets that could have otherwise been protected with proper estate planning.

  • It can take months for probate to finalize and distribute assets.

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Who can be a contingent beneficiary?

Contingent beneficiaries typically can be anyone: family, friends, charitable organizations or others

Life Happens. Who can be a life insurance beneficiary?. Accessed May 17, 2023.
. However, pay attention to your state’s laws. They might require you to make your spouse the primary beneficiary on certain accounts, or they may require your spouse to sign off on naming someone else as a beneficiary on certain accounts.

How to name a contingent beneficiary

Legal documents such as wills and trusts typically allow people to name contingent beneficiaries on all assets or for specific items. Financial account providers often require account holders to designate primary and contingent beneficiaries as well.

🤓Nerdy Tip

Pay attention to the beneficiary designations on your insurance policies and retirement accounts. The beneficiaries you name on financial accounts typically take precedence over broad designations you make in your will or trust.

It’s wise to inform beneficiaries that they're in your estate plan. This way, they know they'll receive something when you die and can be proactive in reaching out to your attorney or financial institutions when the time comes.

For minor children, you may need to designate an adult to manage their money until they reach a certain age. Discuss the situation with your financial planner or estate planning attorney to determine the best options for your family.

Revisit your list of primary and contingent beneficiaries after major life events such as getting married or divorced, having children or losing loved ones. If you don't update your beneficiaries, it's possible that someone is left out or the wrong people receive your assets.

How many contingent beneficiaries can you have?

You can usually name as many (or as few) contingent beneficiaries as you'd like. However, most people keep the list fairly small because of the size of their estate. Otherwise, if there are too many beneficiaries named, each person receives only a small amount of money.

What information do you need to name a contingent beneficiary?

Because many people have similar names, it is important to provide as much information as possible about your beneficiaries to your financial institutions to ensure that your money goes to the intended people or organizations. Depending on the financial institution, you may need to provide only your beneficiary's name and relationship to you. However, consider providing more information (if you have it) so the institution can find the right person when you die.

Ideally, you should have the following information for each beneficiary:

  • Name.

  • Relationship to you.

  • Date of birth.

  • Social Security number.

  • Phone number.

  • Mailing address.

  • Email address.

If you're naming a charity or other organization, get its full legal name, employer identification number, or EIN, address and phone number.

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