Who Are the Beneficiaries?

Who Are the Beneficiaries?


The individual(s) or organization you name as a beneficiary will receive your estate’s assets after your passing. Your assets will pass to the person named as the next in line by your state or the institution holding them if you fail to name a beneficiary.

Main Points

  • According to your designations on specific types of accounts or insurance policies, a beneficiary is a person (or another entity) who receives assets upon your passing.
  • To ensure that your wishes are still valid, it is crucial to review your beneficiary designations after significant life events.
  • Due to limitations on contractual obligations and the types of property that minor beneficiaries may lawfully own, special rules apply to them.
  • The account owner’s first preference for a beneficiary is a primary beneficiary, with contingent beneficiaries acting as a backup.

Beneficiary: Definition and Illustration

A beneficiary is a person who receives your estate’s assets, such as a life insurance policy’s death benefit. If you have one of these types of accounts, for instance, you’ll likely be asked to choose a beneficiary.

  • Contracts for annuities.
  • 401(k)s, other retirement accounts, or individual retirement accounts (IRAs).
  • Term life insurance.
  • Benefits from pensions1.

Any final wishes you express verbally or in your will may be separated from your beneficiary instructions.

An explanation of a Beneficiary

Typically, you are prompted to name a beneficiary when you open a financial account that will continue to operate after your passing. A copy of the documentation for that account contains this designation.

The provisions of a will typically only apply to assets that do not already have a named beneficiary, in which case the beneficiary designation supersedes (or takes precedence over) the instructions in a will.

Beneficiary designations ought to be reviewed on a regular basis, especially following significant life events like:

  • Marriage
  • Divorce
  • An infant’s birth
  • Death of your spouse, partner, or previously chosen beneficiary

Any significant event that occurs in your life or the life of your beneficiary has the potential to change both of you. To reflect these changes and make sure that the right person inherits your assets upon your passing, you might need to make changes to your designations.

There are some situations where a new beneficiary cannot be named. These might be divorce settlement agreements with specific terms or irrevocable trusts.

Benefits for children

In general, minors cannot legally enter into contracts or own property in their own names. This keeps them from owning specific types of accounts, like retirement accounts, or collecting your life insurance payout themselves. However, there are ways to make sure that cash benefits minors or goes to them. A living trust that names a custodian who will act in the child’s best interests as beneficiary can be used to name a minor as a beneficiary. 5 Alternatively, you may name the child’s guardian or parent as the beneficiary.

Social Security recipients.

Furthermore, if you receive Social Security benefits, you must name a beneficiary.

Beneficiaries of Social Security: Types


  • Auxiliary beneficiaries and the retired worker.
  • Survivors gain.
  • Employees with disabilities and auxiliary beneficiaries.


  • Spouse* of a worker in retirement.
  • The offspring of a retired worker.
  • Little one of a deceased employee.
  • At least 60-year-old widow.
  • A widow(er) under 60 who is the mother of a minor or a child with a disability.
  • 50 or older disabled widow or widower.
  • Dependent parent of a late employee.
  • A worker’s spouse who is disabled.
  • A child of a worker who is disabled.

A child must fulfill one of three requirements in order to be eligible as a beneficiary in these situations:.

  • Minor children under the age of 18.
  • Disabled adult before the age of 22.
  • Student in high school who is under the age of 19.

Do I Require a Beneficiary?

There are a number of factors to consider when selecting a beneficiary to receive your assets after your passing.


By naming a beneficiary, you specify who will inherit your assets in the event of your passing. By doing this, any doubts or disagreements among surviving family members and friends who might assert that you would have preferred someone else receive the assets are put to rest.

Never make the assumption that you understand how your assets will be divided. Even if you don’t specify it on a beneficiary designation form, some financial institutions default to a particular option because they use different strategies.


Choosing a beneficiary expedites the distribution of your assets after your passing. Instead of waiting for the probate process to be finished, claiming assets as a beneficiary may be quicker and simpler.

As soon as the decedent’s death is verified, usually by presenting paperwork like a death certificate and an affidavit of residence, the named beneficiary is usually able to claim assets.

Beneficiaries of various types

Beneficiaries can be divided into two categories: primary beneficiaries and contingent beneficiaries.


The account owner’s first preference for a beneficiary is a primary beneficiary. If the primary beneficiary is still alive at the time of death, they receive the benefits.

In some circumstances, you may have more than one primary beneficiary. For instance, each of the three primary beneficiaries could receive 33.3% of the estate’s assets.


If there are no primary beneficiaries who are still alive or if they cannot be located, contingent beneficiaries are used as a fallback.

Let’s say, for illustration purposes, that the account owner designates his wife as the main beneficiary. At his passing, she would inherit all of his possessions. There is no living primary beneficiary, however, if the husband and wife pass away simultaneously in a car accident. As a result, any potential contingent beneficiary would receive the assets.

State law or the policies of the company holding the account will govern what happens to the assets if there is no contingent beneficiary or if none of the contingent beneficiaries makes a claim.

Different Options

Within these two main categories, there are additional ways to name beneficiaries. You might:

  • Instead of just one person, designate a company or other entity as your beneficiary.
  • If you specify that assets should be distributed “per stirpes,” it means that the beneficiary’s children would take over the assets if they passed away before you did.
  • Make the decision that your estate’s assets should be distributed “per capita,” or equally among your beneficiaries, after your passing.

Understanding beneficiary designations and your options is crucial, particularly when taking into account children, multiple generations, or the possibility that beneficiaries may outlive you.

To ensure you are accurately capturing your wishes, consult with your financial planner or estate planning attorney.

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