What is the beneficiary of the “atomic bomb” or the “potential remainder”?


When planning your estate, among other things, you need to decide who should inherit your assets. You choose your beneficiaries, usually your children, grandchildren or other close relatives. But what if all of your chosen beneficiaries and all of their descendants died? Then it falls to the beneficiary of the “potential remainder”.

The recipient of the “remaining unit” often has a generic title, such as the recipient of the “atomic bomb” or the recipient of “exploding turkey”. A potential residual benefactor is often given this nickname because it is a very unusual circumstance. The odds of all of your grandchildren dying before they are usually very low. Of course, this does not mean that it is impossible.

But, nevertheless, you should seriously consider who you should choose for this role. Sometimes people choose their heirs in law because they think they should or should do so. However, if all of your grandchildren have passed away before you, depending on state law, it may mean that your heirs will be some distant relatives with whom you have little or no relationship in real life.

Sometimes people choose a charity as an emergency beneficiary. Sometimes they choose alma mater their church, or the charitable organization they have given consistently during their lifetime.

There is no wrong choice for the role of the remaining unit. But you’re not required to choose a specific one either. You do not have to choose your heirs in law, just because you may share a common ancestor. Think about the decision and name whoever you feel in your heart will be the best recipient of your assets in the event of the death of your primary beneficiaries. You’ll be glad you did.

After you choose your beneficiaries, including first-line recipients like your children, and the remaining “atomic bomb” recipient, you’ll sleep better knowing you’ve covered all your bases. You’ll know your assets are going where you want them to, even in the most unlikely of scenarios.

Stephen C. Hartnett, JD, LLM
Education Manager
American Academy of Estate Planning Lawyers, Inc.
9444 Balboa Street, Suite 300
San Diego, CA 92123
Phone: (858) 453-2128
www.aaepa.com

Publication What is the beneficiary of the “atomic bomb” or “conditional rest”? It first appeared in the American Academy of Estate Planning Lawyers.



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