Contingent beneficiaries are the backup heirs who inherit if your primary beneficiaries cannot or will not accept their inheritance. They step in when primary beneficiaries die before you, disclaim their inheritance, or are otherwise unable to receive assets. Without proper contingent beneficiary planning, your assets might pass to unintended recipients or through intestacy laws.
Our friends at Aptt Law LLC discuss contingent beneficiaries as essential safety nets that many people overlook until problems arise. An estate planning lawyer can help structure multiple layers of contingent beneficiaries that cover various scenarios you might not anticipate. The goal is creating a complete plan that addresses what happens if your assumptions about who survives you turn out to be wrong.
Most people name primary beneficiaries without difficulty. The challenge lies in thinking through the backup scenarios. What if your spouse dies in the same accident? What if your only child predeceases you? What if all your children die before you do? These uncomfortable questions demand answers in your will.
Primary beneficiaries inherit first if they’re alive when you die and willing to accept the inheritance. These are the people you most want to benefit from your estate.
Contingent beneficiaries inherit only if primary beneficiaries cannot or will not inherit. They’re the second choice, activated when the primary plan fails for some reason.
Some wills include multiple layers of contingent beneficiaries. If the primary beneficiary can’t inherit and the first contingent beneficiary also can’t inherit, a second contingent beneficiary receives the assets.
The primary beneficiary dies before you. This is the most common reason contingent beneficiaries receive inheritances. Without a named contingent, assets might pass according to your will’s residuary clause or state intestacy laws rather than your intended backup plan.
Beneficiaries can disclaim inheritances for various reasons. Tax planning sometimes makes disclaiming beneficial. Personal circumstances might make a beneficiary unwilling to accept property. Disclaimers allow assets to pass to contingent beneficiaries as if the disclaiming person had predeceased you.
You and your primary beneficiary die in the same accident. Most states have adopted versions of the Uniform Simultaneous Death Act establishing rules for these situations, but clear contingent beneficiary designations prevent ambiguity.
A primary beneficiary might be alive but legally incapable of inheriting due to incapacity or other legal restrictions. Contingent beneficiaries can receive assets in these circumstances depending on how your will is drafted.
For specific bequests of property or fixed amounts, name both primary and contingent beneficiaries clearly.
Example: “I give my diamond ring to my daughter Sarah Jones. If Sarah Jones does not survive me, I give the ring to my granddaughter Emma Jones.”
This structure creates a clear chain. Sarah gets the ring if she’s alive. If not, Emma receives it. Without naming Emma as contingent, the ring might fall into your residuary estate and be distributed with everything else rather than going to the intended family member.
Consider adding additional contingent layers for valuable items. If both Sarah and Emma are deceased, you might specify a third contingent beneficiary or direct the item to be sold with proceeds distributed to your residuary estate.
When dividing assets among multiple beneficiaries, specify what happens if one or more cannot inherit. This prevents confusion about how shares should be redistributed.
“Per stirpes” means “by branch.” If a beneficiary predeceases you, their share passes to their descendants rather than being redistributed among surviving beneficiaries.
Example: “I give my residuary estate to my children John Smith, Mary Johnson, and Robert Smith in equal shares, per stirpes.”
If Mary predeceases you but has two children, Mary’s one-third share would be divided between her two children. John and Robert still receive their one-third shares.
“Per capita” means “by head” and distributes assets equally among the surviving generation without regard to which branch they come from.
Example: “I give my residuary estate to my grandchildren, per capita.”
Each grandchild receives an equal share regardless of whether their parent (your child) is living. This approach treats all grandchildren identically rather than dividing by family branch.
You can specify exactly how a deceased beneficiary’s share should be handled without using Latin terms.
Example: “I give my residuary estate to my three children in equal shares. If any child predeceases me, their share shall be divided equally among my surviving children.”
This makes clear that surviving siblings split a deceased sibling’s portion rather than it passing to the deceased sibling’s children.
Charitable organizations make excellent contingent beneficiaries when you want to benefit family first but support causes if family members cannot inherit.
Example: “I give $50,000 to my nephew James Brown. If James Brown does not survive me, I give this amount to the American Red Cross.”
Name charities precisely with their full legal names and locations. Many organizations have similar names, and clarity prevents confusion about which entity should receive the bequest.
Class gifts benefit groups of people rather than specifically named individuals. Common classes include “my children,” “my grandchildren,” or “my siblings.”
When using class gifts, specify whether adopted children, stepchildren, or children born after the will’s execution are included. Define the class clearly to prevent disputes.
For contingent beneficiaries in class gifts: “I give $100,000 to be divided equally among my grandchildren. If no grandchildren survive me, I give this amount to be divided equally among my nieces and nephews.”
Your residuary clause disposes of everything not specifically gifted elsewhere. This clause needs particularly careful contingent beneficiary planning because it catches all remaining assets.
A typical structure: “I give my residuary estate to my spouse. If my spouse does not survive me, I give my residuary estate to my children in equal shares, per stirpes. If none of my children or their descendants survive me, I give my residuary estate to [named charity].”
This creates multiple fallback positions. The spouse inherits first, then children and their descendants, then a charity if no family survives.
The most common error is simply omitting contingent beneficiaries entirely. Every primary beneficiary designation should have a backup plan.
Ambiguous language creates problems. “My family” or “my relatives” lacks precision. Name specific people or clearly defined classes.
Life changes require beneficiary updates. Marriages, divorces, births, and deaths should trigger will reviews to update both primary and contingent beneficiaries.
Parents often assume they’ll predecease their children, but this isn’t guaranteed. Plan for scenarios where children die before parents.
Avoid situations where two wills name each other as beneficiaries without proper contingent planning. If spouses die simultaneously with each naming the other as primary beneficiary and no contingents, intestacy laws might govern distribution.
If contingent beneficiaries might be minors when they inherit, create trusts to hold and manage assets until they reach appropriate ages. Simply naming minors as contingent beneficiaries can create guardianship complications.
Contingent beneficiaries receiving government benefits need special needs trusts to preserve benefit eligibility. Direct inheritances can disqualify them from important programs.
Foreign beneficiaries face potential tax complications. Consult with professionals about structuring bequests to non-U.S. citizens appropriately.
While pets cannot legally be beneficiaries, you can create pet trusts with contingent human beneficiaries who inherit any remaining funds after the pet’s care ends.
Many wills include survivorship requirements for beneficiaries. A typical provision requires beneficiaries to survive you by 30, 60, or 90 days to inherit.
This prevents assets from passing to someone’s estate when death occurs shortly after yours. The contingent beneficiary inherits instead if the primary beneficiary dies within the survivorship period.
Example: “All beneficiaries must survive me by 30 days to receive any bequest under this will. Any beneficiary who fails to survive me by 30 days shall be treated as having predeceased me.”
Contingent beneficiary designations should be reviewed every few years and after major life events. Births, deaths, marriages, divorces, and changed relationships all might require updates.
Create reminders to review your will periodically. What made sense five years ago might no longer align with current family circumstances.
Consider discussing your contingent beneficiary choices with family members if appropriate. This reduces surprise and potential conflict when your will is eventually probated.
Documentation explaining why you chose particular contingent beneficiaries can help family members understand your reasoning, though such explanations aren’t legally binding.
Taking time to think through backup scenarios and name appropriate contingent beneficiaries creates a complete estate plan that works regardless of which family members survive you. We encourage you to consider not just who you want to inherit, but also who should receive assets if your primary choices cannot. Building these contingency layers into your will protects your wishes and prevents unintended distributions that could result from failing to plan for all possibilities.
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Ms. Katje earned her Juris Doctorate at California Western School of Law, San Diego, California, graduated Cum Laude and was a Dean’s Honor List recipient. She was also a recipient of the American Jurisprudence Award in Contracts I and Contracts II. Ms. Katje was a member of the Law Review and International Law Journal at California Western School Law, where she was an Associate Editor.
