What is a contingent beneficiary, and how to name one

Name a backup beneficiary on every account, because the first person on the form may not outlive you.

Close-up of a senior adult signing a legal document with a focus on hand and gold ring. — Photo: Matthias Zomer / Pexels

Area: MoneyFrom age 18Time to learn: 15 minutes to learn; about an hour to update every account

A primary beneficiary inherits an account first. A contingent beneficiary inherits it only if no primary beneficiary is alive to take it. Naming both on every account that allows it lets the money pass directly to a person instead of through your estate.

Why it matters

Retirement accounts, life insurance and many bank and investment accounts pay whoever is named on the account's own beneficiary form. In the US a will generally does not override that form. In Canada a will can name a beneficiary for some plans, so the will and the forms need to agree. If no one named on the form is alive, the money usually goes to your estate. That means probate and delay, and for an inherited IRA it can mean the account has to be paid out sooner. A Canadian life insurer will treat your estate as the beneficiary by default, and creditors can then claim the payout. Only about one in four American adults (24%) say they have a will, so these forms are often the only instructions an account will ever have.

In 2025, 24% of American adults said they had a will, down from 33% in 2022.

Source: Caring.com 2025 Wills and Estate Planning Study, conducted with YouGov (2,500+ US adults), 2025.Self-reported

How to do it

List every account that pays out when you die: workplace plans such as a 401(k) or 403(b), IRAs, pensions, RRSPs, RRIFs, TFSAs, life insurance, and any bank or brokerage account that allows a payable-on-death (POD) or transfer-on-death (TOD) designation.
For each account, log in or ask the provider for its beneficiary form, and write down who is named now. A blank form still has an effect. It usually sends the money to your estate, or to whoever the plan's own rules name, such as a spouse.
Name your primary beneficiary, meaning the person or people who inherit first. Give each person's full legal name, date of birth and relationship to you, and assign percentages so the primary shares add up to exactly 100%.
Name your contingent beneficiary. This is the backup who inherits only if every primary beneficiary has died before you or turns the money down. Give the contingent shares percentages that also add up to 100%.
If a beneficiary is under the age of majority, do not name the child directly. Name a trust, trustee or custodian instead. In Canada, if you leave a life insurance payout to a minor with no trustee, the province or territory holds it in trust until the child reaches the age of majority.
On a US private-sector workplace plan covered by federal law (ERISA), such as most 401(k) plans, check the spouse rule. Your surviving spouse automatically receives the account. To name anyone else, your spouse must sign a waiver witnessed by a notary or plan representative. Government plans and some church plans follow different rules.
On a Canadian TFSA, name your spouse or common-law partner as successor holder if you want the account to continue in their name, and name anyone else as a designated beneficiary. Quebec does not recognize these designations on most TFSAs (annuity contracts are the exception), so if you live there, make them in your will. Ask each provider whether the same applies to your RRSP or RRIF.
For a POD bank account, confirm that the bank has the beneficiaries in its own account records. Your notes are not enough.
Save every confirmation. Review all your forms after a marriage, divorce, birth or death, and at least once a year.

Common mistakes

Naming only a primary beneficiary. If that person dies first and no one updates the form, the account can end up in your estate and go through probate.
Naming your estate, or leaving the form blank. For an inherited IRA, an estate does not count as a designated beneficiary, and that can force the account to be paid out faster than if a person had been named. A life insurance payout made to your estate can be claimed by your creditors.
Counting on your will or a divorce to update the form. In the US, a will does not change a beneficiary form, and a divorce may not remove an ex-spouse from it. In Canada, a will can name some beneficiaries, but a later form can still take priority. In both countries, the reliable way is to file a new form with each provider.
Writing percentages that do not add up to 100%, or naming a group such as 'my children' without listing each name.

You can do this when …, for every account you own, you can say who inherits first, who inherits if they cannot, and what share each person gets, and you have a saved confirmation for each form.