What Is a Secondary Beneficiary?

A secondary beneficiary is a provision that is often found in many last wills and testaments. This type of beneficiary is identified as the individual or entity that will be awarded the assets in question should the primary beneficiary is unable to receive those assets. Sometimes referred to as a contingent beneficiary, the secondary beneficiary will usually inherit the assets named in the event that the primary beneficiary has passed away or is incapacitated in some manner that makes it impossible to assume control of the awarded assets.

The most typical arrangement for a secondary beneficiary is to identify this secondary individual in the event that the primary beneficiary should die before the grantor passes away. For example, if the asset involved is the proceeds from a life insurance plan, the insured party may designate a spouse as the primary beneficiary while also identifying a child as the contingent or secondary beneficiary. In this scenario, should the spouse predecease the insured party, then the insurance company will award the proceeds from the plan to the child named in the terms of the policy.

Choosing to identify a secondary beneficiary is often a good way to make sure that the assets of the deceased are distributed in a manner that is in keeping with the last wishes of the grantor. Adding this additional instruction to a will or insurance policy can also help to minimize the potential for contests of the terms, especially when the primary beneficiary is also deceased. Owing to the specific nature of this approach, there is less opportunity for others to lay a claim on assets simply because a primary beneficiary has also passed away. From this perspective, the arrangement can help make settling the affairs of the estate much easier and prevent prolonged delays in carrying out the wishes of the deceased.

In many instances, it may be possible to designate more than one secondary beneficiary. For example, if the primary beneficiary is a spouse, and the couple have two children, both those children may be named as contingent beneficiaries, sharing equally in the benefits from the life insurance plan or the assets named in the last will and testament. Attorneys who are well-versed in the current laws regarding last wills and testaments can advise clients on the best way to use the concept of a second beneficiary to make sure that all assets are awarded according to the wishes of the client.