What Is a Contingent Beneficiary?

Naming a contingent beneficiary can be a very important part of estate planning. Here are the basics of what contingent beneficiaries are and why they are important.

Contingent Beneficiary

In certain areas of estate planning, you are going to need to name contingent beneficiaries for your assets. First of all, you are going to have to name a primary beneficiary for your assets. You will then have to name a contingent beneficiary. The contingent beneficiary is also referred to as a secondary beneficiary in some cases. This individual is going to move up to a primary beneficiary if the original beneficiary passes away before you do. Naming a contingent beneficiary is going to be important so that your assets will definitely go to someone if you and your primary beneficiaries pass away unexpectedly.

When They Are Used

There are a number of different cases in which you could name a contingent beneficiary. If you have a life insurance policy, you are most likely going to want to name a contingent beneficiary. For example, you might make your spouse the primary beneficiary and your child the contingent beneficiary. You will also use a contingent beneficiary if you have a retirement account or other financial accounts. 

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