After you name the primary beneficiaries of your living trust, you will have a few more choices to make. You can make a backup plan by naming alternate beneficiaries for any of your gifts. And unless you've named just one person (or a group of people) to receive all of your trust property, you'll need to name a "residuary" beneficiary to receive any of the gifts that don't end up with your first choices.
You can name an alternate for every person you name as a primary beneficiary. The alternate will get the property left to the primary beneficiary if your first choice does not live for more than 120 hours (five days) after your death. This "survivorship" period ensures that if you and a primary beneficiary die simultaneously or almost so, the property will go to the alternate beneficiary you chose, not to the primary beneficiary's heirs.
EXAMPLE: Laura leaves all her trust property to her sister Jean, and names her daughter as alternate beneficiary. Laura and Jean are seriously injured in a car accident; Jean dies a day after Laura does. Because Jean did not survive Laura by at least five days, the trust property she would have inherited from Laura goes to Laura's daughter instead.
If there had been no survivorship requirement, at Laura's death the trust property would have gone to Jean; when she died a day later, it would have gone to her heirs.
There is usually a small chance that the primary beneficiary may not survive you, so it's a good idea to name an alternate. If you don't name an alternate, the property that beneficiary would have received will be distributed to the person or institution you name, in the next part of the program, as your "residuary beneficiary," see below.
If you name more than one person as alternate beneficiaries, they will share the property equally unless you state otherwise.
If you leave all your trust property to one person (or a group of people to share), you will not name a residuary beneficiary. But if you made any specific gifts, you will name a residuary beneficiary for your living trust. The person or organization you name will receive:
Often, the residuary beneficiary of a living trust doesn't inherit anything from the trust. Usually, naming a residuary beneficiary is just a backup measure, to guard against the extremely small chance that both a primary and alternate trust beneficiary do not survive you.