Key Points to Remember

A contingent beneficiary is next in line to receive your assets if your primary beneficiary cannot or will not accept them.

If you do not name a contingent beneficiary for your retirement accounts, they may end up in probate if your primary beneficiary passes away before you.

You can designate multiple beneficiaries for both primary and contingent roles, making it important to keep your designations up to date.

Definition and Example of a Contingent Beneficiary

A contingent beneficiary is second in line to receive an inheritance after the primary beneficiary. They will only inherit if the primary beneficiary is unable to do so. It is important to name a contingent beneficiary to avoid assets going into probate.

When considering who will inherit your assets, you can divide percentages among primary and contingent beneficiaries, ensuring your assets are distributed as you wish.

How Contingent Beneficiaries Work

Primary beneficiaries are at the front of the line, with contingent beneficiaries next in line. Contingent beneficiaries only inherit if the primary beneficiary cannot. It is important to name both primary and contingent beneficiaries, and to update them as needed.

Contingent vs. Primary Beneficiaries

A contingent beneficiary is the backup recipient if the primary beneficiary cannot accept the asset. It is important to name both primary and contingent beneficiaries to ensure your assets are distributed as you wish.

Pros and Cons of Contingent Beneficiaries

Pros: Contingent beneficiaries can help avoid probate and allow for flexibility in changing beneficiaries as life changes occur.

Cons: Failing to update beneficiaries can result in costly settlements and complications in distributing assets as intended.