A beneficiary is any person, or entity, that will receive an asset after the death of an individual. Beneficiaries are typically named in a specific asset’s beneficiary designation. Bank accounts, life insurance policies, investment accounts, and retirement accounts are among the types of assets that allow for beneficiary designations. These designations can allow for assets to go directly to beneficiaries without having to go through the costly and time-consuming probate process.

Primary beneficiaries are the first beneficiaries due to receive an asset or benefit from an estate. Contingent beneficiaries can also be named in case a primary beneficiary passes away before the death of the account owner.

Anyone, of any age, can be a beneficiary. However, if a beneficiary is still a minor, then the assets will have to be held by the minor’s legal guardian. A beneficiary also need not be a person. A trust, charity, or other entity can also be named as a beneficiary. Individuals generally should not name their own estate as a beneficiary, since this would require the asset to go through probate. Beneficiaries do not need to do any meaningful work to receive the assets they are due. If a beneficiary is not named for a specific asset, then that asset may need to go through the probate process.

One area to watch out for is if a potential beneficiary is receiving government benefits. In that case, individuals should work with an experienced elder or special needs attorney to look for a way to benefit that person without endangering their eligibility for benefits. 

Individuals should regularly review, and, if necessary, change, their beneficiary designations to make sure they are up to date.

For assistance with estate planning, wills and trusts, special needs planning, and related areas, please call Mitchell, Brown and Associates at (314) 962-0186.