Many individuals approach the creation of a comprehensive estate plan with something of a checklist. They will assign beneficiaries to high-value property such as a home, vehicle, vacation property or commercial real estate. Unfortunately, many people miss the opportunity to include a secondary beneficiary in the event there is an issue in the future with a primary beneficiary.
While every familial situation is unique, there are numerous common reasons why it is a good idea to include secondary beneficiaries in the will and other estate planning documents, including:
- Death of the beneficiary: When the beneficiary dies before the testator, it can cause a significant amount of turmoil before the asset is properly distributed. With a secondary beneficiary in place, especially later in life, the legal process can continue to move swiftly toward its conclusion.
- The beneficiary refuses the inheritance: It is not uncommon for a primary beneficiary to refuse acceptance of an inheritance. This could occur for many reasons including a familial dispute or an unwanted financial obligation.
- The beneficiary cannot be located: Through the probate process, the beneficiaries must be located and contacted regarding the death of a loved one. Unfortunately, either through undocumented moves or a decision to live off the grid, some heirs simply cannot be located. With a secondary beneficiary in place, the probate process may continue.
It might seem like an easy procedure to list assets and heirs when developing a comprehensive will. Unfortunately, the addition of secondary beneficiaries on valuable assets can ultimately reduce family strife and unnecessary delays later on. It is wise to anticipate these challenges and work to avoid them.