Do you know what a contingent beneficiary is? A contingent beneficiary is the name of persons specified by the owner. It includes a trustor of the trust, an insurance contract holder, etc. They are entitled to the insurance proceeds or assets provided the predetermined conditions are obtained on time. All this information is found on a will. If you wish to know the importance and benefits of including contingent beneficiaries, look here. For more information, an estate law attorney can guide you.
The Importance Of Including Contingent Beneficiaries
Keeps Away From Probate Court:
The main reason to include contingent beneficiaries is to keep the asset away from the probate court. By including the names of beneficiaries, you have control over assets. In addition, you know from before where this will go after you are no longer there. Include as many beneficiaries as you want and assign the percentage of your assets they will get.
Expiry Of Your Beneficiary:
In case your beneficiaries expire before you, or during the same time of yours, the asset will get distributed among other beneficiaries whose names you have included. Similar to how you designate portions to primary beneficiaries, here also it can be done. For that, a business estate planning expert can help you.
Not Including The Details Of Beneficiaries:
Suppose if you have not included the details of a contingent beneficiary, people in charge of the primary beneficiary cannot claim your death benefits. In this instance, the asset manager or the brokerage firm transfers all your properties and money to your estate.
Benefits Of Including Contingent Beneficiaries
- Length Probate Process: If you do not mention the details of contingent beneficiaries, they have to go for a probate process. It is lengthy and causes delays when it comes to getting the property distributed among your loved ones. When the names of designated beneficiaries are mentioned, they will get the required assets after you pass away. They do not have to undergo any trials, as you have already mentioned what needs to be done.
- Eliminating Probate Fees: Many provinces ask for probate fees depending on the value of the asset. The cost needs to be borne by the beneficiaries, which, of course, they do not want to. That’s why it is better to specify all details beforehand. In that way, your family or near and dear ones do not have to opt for a probate process. It is a suitable way to save some money.
- Maintaining privacy In Your Affairs: While the probate process is carried out, any document being present in the court becomes a public document. It means the paper can be seen by any family member, even whom you do not want to show. As they will never govern assets with beneficiaries, there is no need for executors to provide them in front of the court. In that way, there is no chance that the beneficiary designations will not become public documents. It helps in maintaining privacy in your affairs.
- Providing Protection To Potential Creditors: Your executors should notify your creditors of your expiry. Designated beneficiaries eliminate those assets from becoming a part of the estate. In that way, it will help in protecting them from creditors’ claims. It is another benefit to look for, which you can receive after including the names of contingent beneficiaries.
- Eliminating Intestacy Rules: Dying without a valid testament to the assets with beneficiary designations can eliminate the necessary provincial intestacy rules. These are terms and conditions which signify who will get how much percentage of the asset. They might not be someone whom you want to give the inheritance. Thus, if you want to avoid them, it is better to consider including contingent beneficiaries while planning an estate.
What To Look For While Including The Names Of Beneficiaries?
Not everyone must be aware of all parameters when it comes to estate planning. In this instance, you can consider hiring an estate law firm with a brief knowledge of the process. With that, a few other parameters to look for while including the beneficiaries’ names are:
- Planning For The Entire Estate: While planning and distributing the entire estate, your beneficiary designations on insurance policies and registered accounts should be considered. Collecting all the information will help in allocating the asset and including the details of beneficiaries appropriately.
- Include Contingent Or Other Beneficiaries: You must consider appointing contingent beneficiaries regardless of whether you have included designated beneficiaries to insurance policies or other necessary accounts. Not including their names might lead to many problems, so it is better to look for these things.
In The End
Hopefully, it would be easier for all to understand the importance of including the details of contingent beneficiaries. In that way, everyone can save a lot of money which otherwise would have got wasted in a probate process.