More often than not, people select their spouse as their primary beneficiary, and then name their children as contingent, or secondary, beneficiaries. However, the age of your children will likely come into play here.
You can name a minor child as your life insurance beneficiary, but it's not recommended. If you can, you should name a spouse, adult child, or other adult next of kin as your beneficiary.
A lot of people name a close relative—like a spouse, brother or sister, or child—as a beneficiary. You can also choose a more distant relative or a friend. If you want to designate a friend as your beneficiary, be sure to check with your insurance company or directly with your state.
Naming Your Child as a Beneficiary Can Saddle Your Child's Guardian with Burdensome Legal Obligations. The guardian of the property has many legal obligations. This person must obtain permission from a judge to buy and sell certain assets and may be required to obtain permission before using the money for the child.
If you are married or in a common-law relationship of more than two years, your spouse is automatically your beneficiary.
A primary beneficiary is the person (or persons) first in line to receive the death benefit from your life insurance policy — typically your spouse, children or other family members.
Estranged relatives or former spouses – Family relationships can be complicated, so think carefully if an estranged relative or ex-spouse really aligns with your wishes. Pets – Pets can't legally own property, so naming them directly as beneficiaries is problematic.
Many plans require that the spouse is the primary beneficiary, unless the spouse gives written consent to an alternative beneficiary. A plan participant should review and possibly change his or her beneficiaries when his or her spouse dies.
The beneficiary can use the money as they see fit and is not required to split life insurance with siblings or other family members. However, there are situations where siblings may challenge the distribution of life insurance benefits.
Include your spouse if you're legally married. If you plan to claim someone as a tax dependent for the year you want coverage, do include them on your application. If you won't claim them as a tax dependent, don't include them.
No matter how many primary beneficiaries you have, the total percentage allocated must equal 100%. How you divide that 100% is up to you, the policyholder.
If there is a beneficiary other than the spouse, the spouse cannot override it. However, they are usually entitled to half the death benefit because the law splits community property in half. Half the benefits go to the spouse and half to the listed beneficiary.
If you're married with kids, naming a spouse as a primary beneficiary is the go-to for most people. This way, your partner can use the proceeds of the policy to help provide for your kids, pay the mortgage, and ease the economic hardship that your death may bring.
While a spouse doesn't override a designated beneficiary on a bank account, they may be entitled to a portion of the assets in a payable-on-death bank account if those assets are community property.
First, throughout Form I-130A, the immigrant applicant is referred to as “spouse beneficiary.” Therefore, if you are sponsoring your spouse for immigration, Form I-130A refers to your spouse as the “spouse beneficiary.”
Many people assume that the surviving spouse automatically inherits everything. However, this is not the case in California. When a person dies without a will in California, their assets are distributed to their family members according to the state's intestate succession laws.
Multiple beneficiaries
For example, if you name your spouse, child and a local charity as primary beneficiaries, you might allocate 50% to your spouse, 30% to your child and 20% to the charity. No matter how you divide a life insurance payout among beneficiaries, the percentages must add up to 100%.
The primary beneficiary is the person or persons selected to receive the death benefit (contributions and interest) in the event of your death. The contingent beneficiary is the person or persons selected to receive the benefit if the primary beneficiary is not alive at the time of your death.
Surviving Spouse and Child Beneficiaries. If you are married and have kids, you will likely name your spouse and children as policy beneficiaries. The death benefit you leave them can be a significant financial change.
The primary disadvantage of naming a trust as beneficiary is that the retirement plan's assets will be subjected to required minimum distribution payouts, which are calculated based on the life expectancy of the oldest beneficiary.
If you want to designate a beneficiary other than your spouse, your spouse's notarized, written consent is required. Additionally, if you want to change to a different beneficiary later on, you must receive notarized consent again.
In the overwhelming majority of cases, it is our recommendation to our married clients that they name their spouse as the primary beneficiary of their retirement account and name the Trust as the second or alternate or contingent beneficiary.
Once your children are adults, you can add them as primary or contingent beneficiaries without the legal implications of naming a minor beneficiary. Insurance companies can't give life insurance payouts directly to minor children.