Contingent beneficiary


Also found in: Legal.

Contingent Beneficiary

In wills and insurance, a beneficiary who receives the benefit in case the primary beneficiary dies or is otherwise unable to receive the benefit. In cases where the primary beneficiary is mentally incapacitated, a contingent beneficiary is often named to ensure that assets are used to help the primary beneficiary. Attorneys commonly recommend that wills include at least one contingent beneficiary, and sometimes a list of successive contingent beneficiaries so as to remove any ambiguity.

Contingent beneficiary.

A contingent beneficiary receives the proceeds of an insurance policy, term-certain annuity, individual retirement account (IRA), employer-sponsored retirement savings plan, will, or trust if the primary beneficiary dies before the benefit is paid or if he or she declines to accept the benefit.

For example, if you name your spouse as the primary beneficiary of your IRA, you might name your children as contingent beneficiaries. Then, if your spouse is not alive at your death, your children inherit your IRA directly.

It's often a good idea to name as contingent beneficiary someone who is younger than you and your primary beneficiary, increasing the chances that the contingent beneficiary will outlive you. Or, if you choose, you might name an institution or a trust as contingent beneficiary.

You have the right to change your designation of contingent beneficiaries, except in the case of an irrevocable trust or a life insurance policy whose terms and conditions were established in a court ruling.

A contingent beneficiary may also be someone who is entitled to inherit assets if he or she meets the terms of the will or trust granting those assets.

References in periodicals archive ?
The result is even less favorable if a charity is named as the contingent beneficiary, which would require the funds to be distributed to the special needs trust within five years, resulting in large tax payments by the trust and reduced opportunities for growth.
The IRA will be deemed to have no designated beneficiary if an otherwise designated beneficiary predeceases the IRA owner and there is no contingent beneficiary named; or the estate is named, or if there are multiple beneficiaries and one is not an individual; or there is some other breakdown in the planning process.
If this is the case, you can name your spouse as primary beneficiary and a child as contingent beneficiary.
Generally, this means a charity can be named as a contingent beneficiary to receive money only if a prior beneficiary dies before the end of his or her life expectancy.
the Canadian grandchild discussed previously) is a contingent beneficiary (i.
In analyzing this statement, the CPA notices that only one of the couple's three children is listed as a contingent beneficiary on the IRA (Mrs.
In a third scenario, the 'estate' is designated the contingent beneficiary of life insurance policies.
The issue can become more complicated when the trust's terms limit the trustee's discretion or when an otherwise contingent beneficiary is granted powers over trust corpus or income.
Some people elect to name a trust as the primary beneficiary of some of their life insurance so that the proceeds will be protected in trust; others name the spouse as primary beneficiary and the trust for the benefit of the child as contingent beneficiary.
29) That rule also applies when the trust is a nonresident trust, eliminating much of the advantage of arguing that a California beneficiary is a contingent beneficiary.