Primary beneficiary vs contingent beneficiary
Table of contents
Table of contents
A will outlines who you want to receive the assets in your estate (the collection of everything you own) after you die. The person or people you name to receive your things are your beneficiaries. More specifically, your primary beneficiaries are the original people you choose to receive your assets. They’ll receive the assets (based on the instructions in your will) as long as they want to receive them and can legally receive them.
If your primary beneficiaries do not or cannot legally accept something you bequeathed to them — including if they have predeceased you — then those assets will instead go to your contingent beneficiaries.
You can name just about anyone as a primary beneficiary of your will, including businesses and organizations. You can choose to name a single beneficiary to receive your entire estate, or you can name multiple beneficiaries. If you name multiple, you can also specify in your will how you want your assets to be divided between them.
There are certain situations, though, when the beneficiaries you choose could make your will more complicated, potentially requiring the help of a lawyer. Examples may include when you disinherit close family or when you want to leave assets to children from a previous marriage.
If you don’t name any beneficiaries, you are considered to have died in a state of intestacy, which essentially means you died without a will. A probate court will determine who should get your estate according to your state’s laws of intestate succession. Your closest family will likely get your assets, but you should check your state’s laws to learn more.
Who a testator (the person who writes a will) chooses as their primary beneficiary depends on their situation. Many people choose their spouse, domestic partner, or children as their primary beneficiaries, but you can name other family members, friends, businesses, and organizations. You could also choose to make a trust the beneficiary of your will, such that your assets would "pour over" into the trust after you died. (If you don’t already have a trust, you can also create a trust via your will.)
Regardless of who you pick, it’s important to remember that your beneficiaries are your heirs. You shouldn’t choose someone who you wouldn’t trust with the assets or money you leave to them. For example, you may not want to leave all your money to a spendthrift son. If you also want to leave instructions for what you want your heirs to do with assets after receiving them, consider writing a letter of instruction, a document that simply lays out your wishes.
Your primary beneficiary is your original choice for who will receive your assets. In some situations, that beneficiary may not be able to accept what you left for them. To ensure those assets still go to a person of your choosing, we suggest naming contingent beneficiaries. A contingent beneficiary is just someone who will receive assets if your primary choice is unavailable or unable to accept the assets.
If a primary beneficiary predeceases you and there is no contingent beneficiary, their inheritance may go to their children through per stirpes distribution, depending on state law.
You may see a contingent beneficiary called a secondary beneficiary or remainder beneficiary. It’s also possible to name a tertiary beneficiary to receive assets in the event your primary and secondary beneficiary cannot receive them.
Beside your will, there are multiple types of accounts or financial situations where you may name beneficiaries. For example, you must name a primary life insurance beneficiary; that’s the person who will receive the death benefit if you die.
You should also name primary beneficiaries for your payable-on-death accounts, like your savings accounts, checking accounts, retirement accounts, and investment accounts. If you create a trust in addition to your will, you will need to name beneficiaries of the trust.
You can make these beneficiary designations without a will — generally through your online account or by filling out a beneficiary designation form — so there’s no need to include them in your will. Doing so may only increase confusion for you heirs or increase the time it takes for them to get inheritances.
Most people could create a strong will without hiring an estate planning lawyer, but you may want to consider an online tool or a digital will-making service that helps you create a state-specific will. These tools are often inexpensive and, as long as they’ve been vetted by attorneys, can help you create a strong will. However, there are certain situations, depending on who you want to name as beneficiary and where you live, that may benefit from the legal advice of an estate planning lawyer.
Here are some situations when you should hire an lawyer to make your will:
You have a very large or wealthy estate.
You have assets, like real estate, in multiple states or countries. (A beneficiary of real estate is called a devisee.)
You have a blended family, such as with step children or half siblings.
You want to name a business or organization (charitable or otherwise) as your beneficiary.
You want to disinherit a spouse or children.
You have a minor child who you want to receive an inheritance only after certain conditions are met.
Derek is a former senior editor and personal finance expert at Policygenius, where he specialized in financial data, taxes, estate planning, and investing. Previously, he was a staff writer at SmartAsset.
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