What is a Contingent Beneficiary?

What is a Contingent Beneficiary – Overview

A contingent beneficiary can support your estate planning goals and might help some assets bypass probate. Designations are common for life insurance policies, retirement accounts, and trusts, but not all assets can avoid probate solely by naming a contingent beneficiary.

You can also choose a contingent beneficiary for your will. However, it will not allow your will to avoid the probate, but they can at least achieve your planning goals.

What is a Contingent Beneficiary

A contingent beneficiary is an individual or entity designated to receive benefits from a retirement account, insurance policy, or other assets if the primary beneficiary is unable or unwilling to do so due to death, incapacity, or refusal.

The same can happen if the primary beneficiary refuses to accept the inheritance. Contingent beneficiaries are only entitled when certain conditions are met.

Why Do You Need a Contingent Beneficiary

While not mandatory, naming a contingent beneficiary in a will or on beneficiary designation forms for specific assets can simplify the distribution process and provide added security for asset transfer upon the account holder’s or testator’s death.

If a contingent beneficiary is not named and the primary beneficiary cannot accept the asset, the asset or death benefit may default to the estate, potentially subjecting it to probate and estate taxes.

This can lead to certain situations, including –

  • When assets default to the estate due to the lack of a named beneficiary, they may increase the value of the estate and potentially increase estate tax liability
  • The death benefit has to go through a probate
  • Only a judge can determine the fate of the death benefit in probate
  • When the death benefit is paid to the estate, it will become fair game for creditors

However, you cannot appoint a contingent beneficiary without making an entire will. By making a will, you can distribute your estate as you wish.

Who Can Become Your Contingent Beneficiary

What is a Contingent Beneficiary

What is a Contingent Beneficiary – Who Can Become Your Contingent Beneficiary?

Anyone you want can become your contingent beneficiary. It is ideal to assign someone you can trust with your estate when your primary beneficiary is not around.

The contingent beneficiary can be an individual, charity, organization, or trust. The assigned individual must have the legal capacity to accept the assets without any complication. You can also name multiple contingent beneficiaries and divide the estate in your desirable proportion.

Here are some people that you can assign as your contingent beneficiary –

  • Someone who can serve as a guardian to your children if both you and your partner die
  • Anyone from your family or close friends
  • Any charitable organization

By having a contingent beneficiary, you can ensure that the death benefits will protect the financial security of your family and loved ones. Contingent beneficiaries can be designated on specific accounts, like life insurance or retirement accounts, independently of a will.

Can You Assign a Child as a Contingent Beneficiary

You can always make a child your contingent beneficiary or primary beneficiary. However, they cannot utilize the money until they reach legal age.

It is very common to assign your partner as a primary beneficiary and announce your children as contingent beneficiaries.

However, you will also need to appoint a legal guardian in case you and your partner are not around. The guardian will manage the assets until the child reaches legal age.

Advantages of Assigning a Contingent Beneficiary

There are multiple advantages to assigning a contingent beneficiary.

  • Assigning contingent beneficiaries for accounts like life insurance and retirement accounts can help those assets bypass probate, but other strategies may be needed for different types of assets.
  • It can reduce unnecessary expenses and save so much time as well.
  • You can always change your beneficiaries in case of any major life changes
  • It will help your family to receive the death benefits without any complication
  • Even if your primary beneficiaries cannot accept the asset, you can distribute your estate among your loved ones.

Disadvantages of Assigning a Contingent Beneficiary

  • Cost considerations mainly apply to the administration of an estate or trust, not specifically to the designation of contingent beneficiaries
  • Your beneficiaries should be aware of their roles. Otherwise, the entire process can become very complicated.
  • Executing the contingency beneficiary rights can be complicated if you have multiple rightful heirs.
  • Until your child reaches legal adulthood, you must trust someone with a sizable sum of money.

The Rights of a Contingent Beneficiary

A contingent beneficiary has the authority to act as an alternative recipient to carry out the terms of the contract. If the primary beneficiaries pass away or are not qualified to assert a valid claim, the contingent beneficiaries may also pursue a legal claim.

Here are a few conditions where a contingent beneficiary can make a rightful claim –

  • If the primary beneficiary is deceased
  • When the primary beneficiary refuses to accept the asset for some reason
  • If the primary beneficiary murders the account holder for the death benefits
  • When the primary beneficiary is nowhere to be found to make the claim


Death is uncertain in everyone’s life. Even if you have someone as your primary beneficiary, assigning a contingent beneficiary is good. This way, you can divide your estate among your loved ones and ensure your family’s financial stability.

See Also

Who Has More Rights Trustee or the Beneficiary

How Long After a Person Dies Will Beneficiaries Be Notified

How Does Life Insurance Work

Who Pays Off the Medical Debt After Death

Long Term Disability Lawyer

Medical Law and Ethics in the US

Current Version
March 12, 2024
Updated By
Andrea Morales G.

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