As executor, you need to know that just because a will-writer makes a bequest to someone in their will does not mean that person will necessarily inherit these assets. While there are numerous reasons for this, the topic we will look at today is when a beneficiary is unable or unwilling to receive this bequest. That’s why estate attorneys always recommend naming a contingent beneficiary in a will. One of the executor duties is to read and understand the will. Learning more about what a contingent beneficiary is will help you as you perform your executor role.
A contingent beneficiary inherits assets when the primary beneficiary cannot or does not inherit. When a primary beneficiary is a person, they cannot inherit if they are dead (predeceasing the will-writer). When a primary beneficiary is an entity like a charity, it cannot inherit if it no longer exists. A beneficiary can also decline to accept their bequest, which is known as disclaimer.
Without naming a contingent beneficiary, you risk a judge dividing your estate according to state laws, or even turning your estate over to the state in which you resided at death. In many states, if a will does not contain a contingent beneficiary, and the primary beneficiary does not inherit, the estate assets may be subject to intestacy laws. By naming a contingent beneficiary (or two or three), will-writers are better able to ensure their estate assets are distributed the way they want.
Naming a contingent beneficiary in a will is extremely common. It is so common that nearly every will contains it. Take the example of spouses writing a will. The most common will for a spouse is one that gives their entire estate to the surviving spouse. But those wills usually contain a contingent beneficiary in case the will-writer is not the first in the couple to die. Often in this example, the children are the contingent beneficiaries. This means that if the spouse cannot inherit, the children will inherit the assets.
Contingent beneficiaries are commonly named in legal documents such as wills, trusts, and life insurance policies. They serve as a safeguard to ensure that your assets are distributed according to your wishes, even if the primary beneficiary is unavailable.
A will-writer should name one or more contingent beneficiaries in their will and an executor should know about how the presence (or absence) of contingent beneficiaries may impact the distribution of an estate’s assets.
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