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Choosing Contingent Beneficiaries and Fiduciaries for Your Estate

Creating an estate plan requires you to think seriously about how you want your property handled when you’re gone. You choose your beneficiaries, how much should they receive and when. You also choose a fiduciary — a trustee, personal representative or other person who will manage your estate.

But you will also need to specify what should happen if one of your beneficiaries or your fiduciary dies before you do or, in the case of a fiduciary, is incapable or unwilling to carry out their duties. This calls for choosing contingent beneficiaries or contingent fiduciaries. If your beneficiary or fiduciary of choice isn’t available, the contingent person steps up to replace them.

If you don’t name contingent beneficiaries, the assets may have to pass according to state law. And if you don’t name a contingent fiduciary, one may have to be appointed by a court before your trust or estate can be distributed.

Let’s say you create a trust and name your son as a beneficiary but name no contingent beneficiary. A few years later, your son unfortunately passes away in an accident. You don’t make any changes to your trust. How should your son’s interest in the trust be handled? Does it pass to your son’s heirs or does the trust fail, causing the property to revert to your estate? This difficult question can lead to costly probate litigation for your family. Fortunately, the conflict can be avoided by naming a contingent beneficiary who can receive what would have been your son’s share.

In addition to naming contingent beneficiaries on wills and trusts, you should make sure you name them on other assets that will pass outside of your estate. These include:

  • Insurance policies
  • Retirement accounts
  • Transfer-on-death accounts

Similarly, if you create a living trust, in which you are the trustee during your lifetime, you name a successor trustee who will take over upon your death. You should also name a contingent trustee, someone who can take over if the first trustee dies, is incapacitated or otherwise is unable to carry out their duties properly. If you don’t name a contingent trustee, the trust could end up in probate court, where your family may incur significant expenses. This is an undesirable outcome considering that one of the main purposes of a trust is to help your family avoid probate.

The attorneys of The Sterling Law Group would be happy to meet with you to discuss your estate plan and make any changes necessary to ensure that you have contingent beneficiaries and fiduciaries in place. Call 916-790-9202 or contact us online to arrange a meeting in Roseville or Sacramento or on a conference call.

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  • Roseville Office
    300 Harding Boulevard
    Suite 205
    Roseville, California 95678
    Phone: 916-790-0852
    Fax: 916-760-2701
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    770 L. Street
    Suite 950
    Sacramento, California 95814
    Phone: 916-790-0852
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