How to Determine Primary Beneficiary Percentages

Beneficiary percentages set the guidelines for how funds should be distributed.

Whether you're creating a will, conducting estate planning, buying life insurance or setting up retirement accounts, you need to designate beneficiaries of your possessions or funds should you pass away. These designations are typically listed by percentages in lieu of monetary amounts, with the understanding that values of accounts can shift up or down over time. This allows you to select the percentages once, without having to reassess your assets each year and adjust the values given for each beneficiary.

Step 1

Determine who you want to be your primary beneficiaries and who you will leave as secondary beneficiaries in the event that you die after your primary choices pass away. These names must be specific persons or the estate itself, not "my children" or "my heirs."

Step 2

Use $100,000 as the basis for your percentage calculations. Divvy the money among your primary beneficiaries according to how much you want each to receive. For example, Child A receives 30,000, so 30 percent is her allotment.

Step 3

Make adjustments to increase or decrease the percentages until you are satisfied with the amounts. If you lose or gain significant amounts of money, these percentages will not change.

Step 4

Total your percentages and make sure the full listing of all primary beneficiaries adds up to 100 percent. If you are over or under 100 percent, you must adjust your percentages until you reach 100.

Step 5

Document the final distributions. You are not obligated to tell these beneficiaries that they are listed or for what percentage.

Tip

List beneficiary names as clearly as possible to avoid confusion. Common names, as well as juniors or seniors with identical names, should be clarified even if you need to include a nickname for that individual. If you want a percentage of money to go to a couple, then list each partner with half of that total percentage.

Warning

If you fail to provide percentages, it’s generally assumed that you intended an equal divide of funds among the primary beneficiaries, but there’s no guarantee how it will be split when no percentages are listed.