Rights of Primary Beneficiary vs. Contingent Beneficiary

By Ronna L. DeLoe, Esq.

Rights of Primary Beneficiary vs. Contingent Beneficiary

By Ronna L. DeLoe, Esq.

A thorough estate plan can include several documents, including a will, life insurance policies, retirement plans, and perhaps a trust, depending on what's in your estate. When creating these documents, you will need to name beneficiaries. Whether beneficiaries have any rights to the proceeds of the policies, your will, or your trust, however, is another matter.

Overview of Beneficiaries

Beneficiaries are people or entities you designate to inherit from your estate when you pass. You can change your beneficiaries at any time, unless it is for an irrevocable trust, which cannot be modified in this way.

Only people or certain types of entities can legally inherit from your will or other estate instrument. For example, you can't leave anything to your beloved pet because animals don't have the legal capacity to accept a gift. Likewise, if you leave property in your will to a minor, you need a legal guardian who can hold the property for the child until they reach the age of majority. You also can specify in a trust that the child doesn't receive the gift until they reach a certain age.

Your beneficiaries will receive the assets from your estate that you want them to have, but whether they're primary or contingent beneficiaries determines who gets what.

Primary Beneficiaries' Rights

Primary beneficiaries are people, trusts, or charitable organizations to whom you want to leave your assets after you pass. Primary beneficiaries inherit your assets ahead of other beneficiaries, in the manner you specify in your accounts, will, or trust. These beneficiaries do not, however, have any rights to your assets while you're alive because of your right to change beneficiaries.

You can have multiple primary beneficiaries and designate how much each receives. The amounts do not have to be equal. For example, if you name three primary beneficiaries, you can divide the assets into one-third for each or designate lopsided percentages, such as 60%, 30%, and 10%. As long as you were legally competent when making your will and when naming beneficiaries, your primary beneficiaries don't have rights to a percentage other than what you specified.

On the other hand, if a primary beneficiary believes someone pressured you to split the assets because of duress or elder abuse, they can claim that you meant for them to have more than what your documents state. It's up to them to convince the court that the split is not what you intended. Although it's not easy to prove, it is possible.

It's not often that a primary beneficiary can claim that someone violated their rights under your will or trust. They can claim this if, after you pass, the executor or trustee refuses to pay them pursuant to the will or trust or if insurance companies don't pay pursuant to the policies. Under those limited circumstances, including duress or elder abuse, the primary beneficiaries have the right to bring a court action to compel payment or to contest the will.

Contingent Beneficiaries' Rights

Contingent beneficiaries are additional beneficiaries named in your estate planning documents who inherit from your will, trust, retirement accounts, or insurance if the primary beneficiaries can't inherit your property. Contingent beneficiaries' rights are extremely limited. They can only inherit if the primary beneficiaries all predecease you or cannot legally accept your bequests. Also, if your primary beneficiary—or all of them, if there's more than one—declines to take your gift, your contingent beneficiaries can inherit that property.

If, for some reason, the executor of the will or trustee of the trust refuses to give the contingent beneficiaries the property they're entitled to, the contingent beneficiaries have the right to bring a lawsuit.

If you need help deciding how to award your estate to beneficiaries, consult an estate attorney. Your rights are superior to everyone else's: you—and you alone—have the right to decide who your beneficiaries are, what they get, and when they get it.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.