What is a contingent beneficiary and should I name one?

A contingent beneficiary is a backup beneficiary who receives the asset if the primary beneficiary has already died or is unable to receive it at the time of your death. On most RRSP, TFSA, and insurance forms, you can name both a primary and a contingent beneficiary.

Naming a contingent beneficiary is generally good practice. Without one, if your primary beneficiary predeceases you and you have not updated the designation, the asset may fall back into your estate — which then triggers probate, estate administration tax, and delay. Naming a contingent beneficiary is a simple way to avoid that outcome.

For example, a common arrangement is to name your spouse as primary beneficiary and your children (equally) as contingent beneficiaries. If your spouse survives you, they receive the asset. If your spouse has predeceased you, the children receive it directly.

When you name multiple contingent beneficiaries, it is worth specifying what happens if one of them also predeceases you — do their children (your grandchildren) take their share, or do the surviving contingent beneficiaries split equally? This level of detail prevents ambiguity.