What is a Contingent Beneficiary?

What is a Contingent Beneficiary What is a Contingent Beneficiary

What is a Contingent Beneficiary – Overview

A designated contingency beneficiary can help to accomplish your desirable estate planning goals and avoid probate. You can assign a contingent beneficiary for everything, whether it’s a bank account, life insurance policy, retirement account, trust, securities account, or any other estate.

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 designated by a retirement account holder or an insurance contract owner. Contingent beneficiaries can receive proceeds when the primary beneficiary cannot locate or is deceased.

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?

It is not compulsory to assign a contingent beneficiary while making a will. However, it can make the entire process less complicated and more secure.

If you do not assign a contingent beneficiary and your primary beneficiary becomes unable to accept the death benefit for some reason, all your death benefits will be paid to your estate.

This can lead to certain situations, including –

  • The death benefit will become subject to the estate taxes
  • 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, without a will, all your assets will be given to your heirs as suggested in your state’s probate laws. Whereas by making a will, you will be able to distribute your estate as per your 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 will be ideal if you 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 can protect the financial security of your family and your loved ones. However, you will not be able to appoint a contingent beneficiary without making an entire will.

Can You Assign a Child as a Contingent Beneficiary?

You can always make a child your contingent beneficiary or primary beneficiary. However, they will not be able to 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 someone as a legal guardian in case both you and your partner are not around. The guardian will be able to manage the assets until the child reaches legal age.

Advantages of Assigning a Contingent Beneficiary

There are multiple advantages to assigning a contingent beneficiary.

  • If you want to avoid probate, you must assign a contingent beneficiary.
  • 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 are unable to accept the asset for some reason, you can distribute your estate among your loved ones.

Disadvantages of Assigning a Contingent Beneficiary

  • It can be a little costly to settle.
  • 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 have to 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 very uncertain in everyone’s life. Assigning a contingent beneficiary is good, even if you have someone as your primary beneficiary. This way, you can then 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?

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I am a dedicated healthcare researcher and an enthusiast specializing in medical grants, medical education and research. Through my articles, I aim to empower healthcare professionals and researchers with valuable insights and resources to navigate these critical aspects effectively.

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