Many people would rather power through the process of developing an estate plan as quickly as possible. It can be challenging for some to confront their own mortality when designing documents that reflect their end-of-life decisions. This process, however, is necessary to both create internal peace of mind and reduce the possibility for unnecessary strife among surviving loved ones. There are certain elements that are often overlooked, though, when drafting an estate plan – namely, the necessity for contingent beneficiaries.
Contingent or secondary beneficiaries are individuals named in a will, trust or other estate plan documents alongside the primary. While every situation is different, there are generally three reasons why you should name a contingent beneficiary:
- Death of the primary beneficiary: Whether it is due to natural causes or the sudden devastation that can follow a motor vehicle collision, it is not uncommon for an heir to pass before the creator of the will. When this happens, it can lead to disarray and complex legal processes to identify and locate a different heir.
- The primary beneficiary cannot be located: Part of the natural progression is to locate the primary beneficiary at the start of the legal process. It is not uncommon, however, for the beneficiary to move, live intentionally off-grid or simply excommunicate themselves from the family. Having a secondary beneficiary in place can eliminate any unnecessary delays.
- The primary beneficiary refuses the inheritance: There are numerous reasons why an heir might refuse the inheritance. It could be based on concerns about additional financial responsibilities, personal preference or a longstanding family dispute. If the primary refuses the inheritance, it is important to have a contingent beneficiary in place.
Naming a secondary beneficiary can prevent needless delays in the probate process. Additionally, these contingencies can eliminate heated emotional debates and familial disputes after your passing. It is wise to take the time to name contingent beneficiaries who can take on important roles throughout your estate planning documents.