A comprehensive estate plan is a series of documents that must constantly evolve to fit the changing needs of the estate. From the purchase of a new property to the birth of a child, people should review and revise many elements of the plan with every significant life event. Additionally, individuals should update their estate plan to include contingencies that prevent unnecessary delays or disputes in the future.
A secondary or contingent beneficiary is someone who is named in the estate planning documents in case the primary beneficiary cannot be located or has refused to accept the distribution of assets. Two main factors that might lead to the addition of secondary beneficiaries can include:
- Death of an heir: For many large physical assets, individuals might choose to list a secondary beneficiary to prevent unnecessary delays in the probate process. With a contingent beneficiary in place, if the primary beneficiary dies before the testator, the asset does not spend any additional time in probate while the court investigates the proper distribution.
- Changing relationships: Over the course of a lifetime, relationships change. Whether this means people forge a new friendship or disputes disrupt a history of commonality, it is wise to include these revisions to an estate plan. In terms of contingent beneficiaries, an individual might list another heir who has shown an interest in a particular physical or digital asset.
Many financial experts agree that people should revise the estate plan every three to five years. As individuals get older, it is important to remember that their primary beneficiaries are aging as well. With this in mind, it is wise to include secondary beneficiaries for large assets, life insurance policies and real property. Additionally, many people include contingent choices for powers of attorney and other important positions.