One of the most important parts of estate planning is naming a beneficiary. This allows Illinois residents to distribute their assets to their family, friends, or organizations. Sometimes, a beneficiary is unable to receive the assets. By naming a contingent beneficiary, you can ensure that your assets are still distributed in a way you decide for yourself.
Contingent beneficiaries
A contingent beneficiary is often referred to as a secondary beneficiary. Your first beneficiaries can be anyone you decide. Many people name their spouses for this role. However, they can be family or friends. You also have the right to name charitable organizations as a beneficiary.
Occasionally, a primary beneficiary isn’t able to receive the assets. This often happens when the primary beneficiary has passed away first. Sometimes this happens when no one is able to contact the primary beneficiary. If a primary beneficiary can’t receive the assets, they would then go to the second beneficiary, assuming the estate plan specifies one.
Your secondary beneficiaries can also be anyone you choose. Many people choose to name their spouse as the primary beneficiary and their children as the secondary beneficiary. You have the right to distribute your assets among however many beneficiaries you like and can also name as many secondary beneficiaries as you like in your estate plan.
Avoiding probate court
The main reason people name secondary beneficiaries is to avoid probate court. If your primary beneficiary isn’t able to receive the assets, your estate will go to the court and they will decide. This will also delay the distribution of assets for months or possibly years.
Naming beneficiaries
You can specify primary and secondary beneficiaries directly in your financial accounts, like on your life insurance or savings account. You can also name both kinds of beneficiaries in a legal document like a will or trust. Writing up a proper estate plan is the best way to make sure the distribution of your assets happens the way you wish.