A contingent beneficiary is a person, trust or estate that has been designated to be the recipient of the assets from a deceased person in the event that the original beneficiary is not able to take the assets for some reason. Perhaps, the primary beneficiary has passed away. Or maybe the primary recipient has not adhered to the restrictions that are attached to the will. Attorneys usually recommend designating a contingent beneficiary in wills as a backup option for the dissemination of property in case the designated beneficiary is not able to receive the assets. A person can designated several contingent beneficiaries in his or will or trust and can even assign them to a specified order.
There are other reasons why someone might designate a contingent beneficiary. For instance, the benefactor may want to control the behavior of the primary beneficiary and may threaten to pass inheritance and assets down to a continent beneficiary if he or she feels that certain criteria have not been met. For instance, if the benefactor does not want the primary beneficiary to get married, he or she could include as a stipulation that if the primary benefactor is no longer single that the assets that are part of the trust or estate will be designated to the contingent beneficiary.
There are some situations that do not allow such restrictions. For example, retirement accounts do not allow the benefactor to put such stipulations into its contract. However, trusts will allow any type of restriction as long as they are legal.