A well-rounded estate plan consists of documents that must be reviewed every so often to make sure they align with the evolving needs of the estate. Life changes as people get married, have children and grandchildren, or sometimes divorce. Estate planning documents in North Carolina need to be updated to reflect these type of significant life changes. An estate plan should also contain contingencies to prevent unnecessary future delays or disputes.
Secondary or contingent beneficiary
A secondary beneficiary is someone named in estate planning documents as an alternate — primarily in a will if the main beneficiary is deceased or doesn’t accept the distribution of assets. There are reasons to add a secondary beneficiary to an estate plan, such as:
- Death of beneficiary: 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 proper distribution.
- Changes in relationships: Relationships can change as life marches on. Whether this means people forge a new friendship or disputes disrupt a history of commonality, it is wise to make revisions in an estate plan as changes come up. In terms of contingent beneficiaries, an individual might list an alternate in the event the primary beneficiary doesn’t accept the distribution of assets.
Professionals suggest people revise their estate planning documents every three to five years. As North Carolina residents get older, they should take into consideration that their main beneficiaries are also aging. With this in mind, it may be wise to name secondary beneficiaries for larger assets like real property and insurance policies. Some individuals might also consider including contingent appointments for their power of attorney or healthcare power of attorney.