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 ?
As an exception to the general rule, however, a settlement naming contingent beneficiaries will qualify if the spouse is given a general power of appointment over the proceeds and certain other requirements are met.
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.
As the beneficiary of his wife's will, the client becomes (if only for an hour) the owner of the insurance proceeds that are actually paid to the specified contingent beneficiaries.
In this scenario, even if the beneficiary spouse predeceases the IRA owner, the children are designated properly as the contingent beneficiaries and will be able to take distributions based upon their individual life expectancies.
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.
33] In Cristofani,[34] the tax court allowed the exclusion even though the exercise period was only 15 days and contingent beneficiaries possessed some of these powers.
Estate Planning - Wills, trusts, contingent beneficiaries, guardianship and inheritance.
You can even provide flexibility by naming a spouse as primary beneficiary and the children as contingent beneficiaries, giving the spouse the choice of keeping the money or disclaiming.
Accordingly, the Roth IRA may be a better choice for funding a special needs trust, especially if the IRA names other individuals relatively near in age to the child with disabilities as the successor or contingent beneficiaries.

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