Everything You Need to Know About Contingent Beneficiary
Planning for incidents that take place after your death involves an incredibly uncomfortable thought process. You have to think about difficult things, such as your own death, as well as the potential death of your loved ones. However, despite being extremely difficult, the preparation process is essential if you wish to select the people to hand over your trust to.
A contingent beneficiary is an individual or a loved one, that you bestow your assets and trust to, after you die, given the condition that your primary beneficiary is not available to receive your lifelong assets. For instance, in the unfortunate case that you label your partner as your primary beneficiary, but they also die in the same accident as you, your contingent beneficiary would be granted your assets and trust.
When you are drafting up your will, your lawyers would ask you to select a contingent beneficiary, in case of an unfortunate incident. With this, you are provided with more control over where your assets can be donated. Additionally, by selecting your primary and contingent beneficiary, your loved ones can avoid the exhaustive process of probate. By taking this initiative during your lifetime, you can save your loved ones a lot of time and energy. If you want, you may further select more than one contingent beneficiary, rank them in an order that you wish to follow.
You can assign a contingent beneficiary to your bank accounts
The money in your account would go to your primary or contingent beneficiary after you die. The contingent beneficiary would have full authority over the account, even if your will suggests otherwise. Keeping this in mind, make sure that there are no discrepancies between the contingent beneficiaries you have named on your will, and on your bank accounts.
You can name someone for your life insurance, annuities and retirement plans
You also have the right to name a contingent beneficiary for your life insurance policy, annuities and retirement plans. However, similar to the way your will works, the primary beneficiary would be the first person entitled to the assets left behind by the policyholder (you). The contingent beneficiary would only be provided with the amount if the primary individual is not available.
Considering this, most people select their partners, spouse or parents as their primary beneficiaries, whereas their young children are elected as contingent beneficiaries. With this plan, they are able to make sure that their children are taken care of, even after their death. With that said, you have full authority over the person you wish to select as a primary or contingent beneficiary for your life insurance, annuities and retirement plan policies. You can ponder over your choices and select people you completely trust.
Naming minors as contingent beneficiaries
Although you can name your children as contingent beneficiaries for your assets, they may not be able to access the money until they are of the legal age. For instance, if you die before your children reach the age of eighteen, you would have to select a person to take care of the assets, until your kids are old enough to effectively manage their funds.
In order to access the money, they would have to provide your death certificate, along with the death certificate of the primary beneficiary.
You can name a charity as your contingent beneficiary
If you do not want your hard-earned money to be wasted, you can select a charity as your contingent beneficiary. This way, if you and your primary choice do not survive, your money could be donated to a cause that you feel strongly for.
Although selecting a contingent beneficiary is not obligatory, you must still name a person or an organization to make sure that your money is spent well.