Naming a beneficiary gives you a say in who receives certain assets, but your plan should also account for what happens if your first choice cannot inherit. A backup beneficiary can help you prepare for that possibility. Here is why naming one may matter in your estate plan.
Your first beneficiary may not be able to inherit
Your first beneficiary may not always be able to receive the asset, which can leave an unexpected gap in your plan. The clearest example is when your primary beneficiary dies before you. When that happens and you have not named anyone else, the asset may pass according to the terms of the account, your estate planning documents or applicable law instead of following a choice you made.
A backup beneficiary gives you another choice
Naming a backup beneficiary lets you decide who receives the asset if your first choice cannot. Rather than leaving that question unanswered, you can name the next person you want to inherit and keep control over where the asset goes. This can matter for accounts or policies with beneficiary designations, where the named beneficiaries can determine who receives the proceeds.
Check who comes next
Review your beneficiary designations to see whether you have named someone to step in if your first choice cannot inherit. Look at the assets that allow you to name beneficiaries and check whether you have listed both a primary and backup beneficiary.
If you are unsure how those designations fit with the rest of your estate plan, an estate planning attorney can help you understand what changes, if any, you may need to make. A few minutes spent checking now can help make sure your wishes still have somewhere to go later.