Contingent beneficiary

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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 ?
Letting clients name minor children outright as primary or contingent beneficiaries of life insurance or retirement plans.
First, Jim can create a trust that names Helen as beneficiary, with Jack and Mary named as contingent beneficiaries who will receive the assets upon Helen's death.
A client who had remarried since the policy was issued might want to name as a primary beneficiary the second spouse, but keep the children from the first marriage as contingent beneficiaries. Similarly, setting up a trust to dispose of estate assets may require changing a policy's designated owner or beneficiaries to remove taxable assets from the estate.
Can life insurance settlements naming the spouse as primary beneficiary and other persons as contingent beneficiaries be so arranged that the proceeds will qualify for the marital deduction?
Because of the difficulty of determining what time period to specify, it is often better to name contingent beneficiaries and have the insurance proceeds paid under a settlement option (other than a life income option that would terminate upon the beneficiary's death).
To avoid having the state design an estate plan for you, name contingent beneficiaries in your will, living trust, life insurance policy, retirement plans and other important documents that require a beneficiary designation.
(20.) Botzum v Havana Natl Bank, 367 Ill 539, 12 NE2d 203 (1937); see also Pernod v American Natl Bk & Tr Co of Chicago, 8 Ill 2d 16, 132 NE2d 540 (trust could not be terminated by consent where there were minor and potentially unborn contingent beneficiaries).
Most larger amounts will be paid according to the policy provisions that specify the recipient when no beneficiary has been designated (or where all primary and contingent beneficiaries predecease the insured).
However, in such an ideal situation, the IRA owner would name the surviving spouse as the primary beneficiary and the children as contingent beneficiaries. If the beneficiary spouse survives the IRA owner, the surviving spouse would then be able to roll over the IRA and designate the children as primary beneficiaries.
Your surviving spouse also has the option to disclaim the assets, resulting in the assets going to other named primary or contingent beneficiaries.
Since Walshire's children were contingent beneficiaries under the will, they would have received any property that Walshire disclaimed from his brother's estate.
Except for certain contingent beneficiaries discussed below, an entity such as a charity or an estate cannot be a beneficiary since trust beneficiaries must be individuals and an estate or charity does not qualify as such.

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