When planning your estate, it is important to understand how your assets are distributed if your primary choices cannot receive them. We use two specific terms to describe these "backup" layers: Contingent and Ultimate beneficiaries.
Definitions
Contingent Beneficiary: An alternate person named to receive a specific gift or a share of your residuary estate if the primary beneficiary passes away before you.
Ultimate Beneficiary: A "catch-all" designation for any gift that has completely lapsed (for example, if no contingent beneficiary was named or if all named beneficiaries have passed away). This is also known as a "disaster" clause.
Currently, our platform allows for one layer of contingent beneficiaries, although you can specify that if a contingent beneficiary passes away before their share distributes, their share can either pass down to that person's descendants or reallocate to the other remaining contingent beneficiaries. We do not support secondary or tertiary layers of contingencies, however. That specific gift would lapse, or if its a residuary gift, may pass to your ultimate beneficiaries.
As an example, you can specify that you want your estate to go to your children in equal shares. If both of them have passed with no further descendants, you can name contingent beneficiaries, such as your niece and nephew, to receive the balance of your estate in that instance. If your niece passes away before she receives this share, her share can pass down to her children or can be allocated to your nephew, depending on your choice. If there is no one left to take the share in this group, your estate would pass to the ultimate beneficiaries, which could be further individuals or charitable organizations.