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A contingent beneficiary is a helpful estate planning tool

On Behalf of | Mar 21, 2024 | Estate Planning |

Perhaps you’re like many people in New Jersey and beyond who have spent time thinking about their own mortality and wanting to take steps to craft an estate plan. You might even have a beneficiary in mind for your last will and testament or insurance policies and retirement accounts, and that’s good. However, do you also have a contingent beneficiary in mind? If you’re not familiar with this estate planning term, you’ll want to read this post through to the end.

Some people refer to a contingent beneficiary as a secondary beneficiary. Both phrases are acceptable. The basic definition of this estate planning title is a person (or people) to whom you wish to inherit your assets when you die if the primary (first choice) beneficiary dies before you or at the same time, which can happen in cases where you’re traveling together and there’s an accident, for example.

A contingent beneficiary ensures the carrying out of your estate planning wishes

If you don’t name a contingent beneficiary, and your primary beneficiary dies before or alongside you, any assets you were leaving to him or her will go through probate. A probate court judge will then determine how to distribute those assets. There is a chance that the determination might differ from what you would have wanted.

Naming a contingent beneficiary ensures that your assets will transfer to an individual or group that you yourself have chosen. This person is “second in line” to inherit from your estate.

Leave no stone unturned to avoid errors or mix-ups

If you plan to name a primary beneficiary and a contingent beneficiary, make sure your designations are clear and thorough. For instance, don’t just write the basic name you have referred to as the designated person during your lifetime. Instead, provide his or her entire legal name. It’s also helpful to list the person’s relationship with you, whether he or she is your child, parent, spouse or friend.

You might also be required to list a beneficiary’s contact information and identification, such as his or her Social Security Number, mailing address, email and phone number. While you are permitted to name more than one primary beneficiary as part of the New Jersey estate planning process, if you do so, make sure the division of benefits you have listed adds up to a sum equaling 100% of your assets. If you want to simplify matters as much as possible, you can choose to name one beneficiary with the understanding that he or she will offer gifts to other people you have pre-selected to receive them.


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