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 ?
For instance, a contingent beneficiary will receive nothing if the primary beneficiary is alive when the insured dies.
15) The contingent beneficiary remained in the name of Sharon Zulkiewski.
But the son declined; thus was lost an opportunity to patch up relations with his mother and get himself named as the annuity's contingent beneficiary.
The most important rule in this subset states that the age of the oldest trust beneficiary at the account owner's death, whether the special needs beneficiary or any contingent beneficiary, will be the measuring life for determining the rate at which retirement funds must be distributed to the trust and, therefore, taxed.
If a Crummey trust provides for a contingent beneficiary to succeed to the interest of the primary beneficiary in the event of the primary beneficiary's death before the trust terminates, the primary beneficiary's failure to exercise his withdrawal right acts as a transfer to the contingent beneficiary, either at the time of the lapse of the withdrawal right or at the time of the primary beneficiary's death.
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.
Contingent beneficiary--A contingent beneficiary is one whose bequest is reliant on some occurrence outside the control of the transferor.
Most often, this occurs where the insured has neglected to name a specific beneficiary or contingent beneficiary or where the beneficiary named has predeceased the insured and the insured died before naming a new beneficiary.
The donor may choose to name a charity as the primary or contingent beneficiary of the account.
Planning Point: A contingent beneficiary is not considered to cause a multiple beneficiary situation for purposes of the rule requiring use of the oldest beneficiary's life expectancy, unless the contingency is something other than the death of a prior beneficiary (for example, a contingent beneficiary in a trust).
If this is the case, you can name your spouse as primary beneficiary and a child as contingent beneficiary.

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