What is a Contingent Beneficiary and Why Is That Important to Me?

In short, a Contingent Beneficiary is a person who will receive a benefit under a Will or Trust subject to a condition or event occurring.

I am in the process of assisting another San Diego family prepare their Estate Plan. A husband and wife team happily married for 25+ years with two children are planning what to do with their North Park home in the event of their deaths. In this case they want the house to transfer to their two adult children in the event of their death. But, what happens in the not-so-random case where mom, dad, son and daughter are all on a family trip when a tragedy occurs and all of them die? This is where a Remote Contingent Beneficiary or Contingent Beneficiary steps in. The person, persons, group or charity identified as a Contingent Beneficiary (or in this case a Remote Contingent Beneficiary) in the Will or Trust steps in to receive the house if the son and daughter cannot receive the house due to their deaths.  The purpose of identifying a Contingent Beneficiary in a legal document such as a Will or Trust is to leave a back-up plan. No one wants to consider such possible tragic scenario like a plane crashing with all family members within, or a boat capsizing with all family members on it. However, back-up plans including Remote Contingent Beneficiaries are important for that specific reason – we never know what will happen in our future.

Take a look at your Will or Revocable Living Trust. Does it identify a Remote Contingent Beneficiary? Do you know who you’re listing as a back-up beneficiary to take your assets (your house, cars and money) in the event your primary beneficiaries predecease you? You have worked very hard to pay off that house mortgage and car loan. Now take the next step and plan properly while you’re in good mental health and have the mental capacity to plan these things yourself.

Some families leave a friend or distant family member. Other families list their grandchildren or extended family. Others elect a charitable organization or favorite group. Consider your options and leave this in writing. If it’s not part of your Will or Trust, it won’t do anyone any good to simply think about your wishes.  This is a good time to also have your Trust reviewed by a professional if you chose to prepare a Will or Trust using a self-help method. An improperly prepared Will or Trust is not valid in the State of California and you don’t want to leave such document to chance.