VocabuLaw

Beneficiary

What is it and what does it mean?

Description of the legal term Beneficiary:

Beneficiary refers to a person or entity who receives benefits or assets from a trust, will or life insurance policy. The term is commonly used in the context of estate planning and trust law. Beneficiaries may be specifically named in legal documents, such as a will, or they may be defined by a class (e.g. “my children” or “my heirs”). The rights and entitlements of beneficiaries depend on the terms of the trust, will or policy under which they receive benefits.

Legal context in which the term Beneficiary may be used:

Example 1: Beneficiary of a Will
Mr Jones, a widower, makes a will naming his two children as beneficiaries. On his death, his assets, including his house, savings and personal effects, are to be divided equally between them. The executor is responsible for ensuring that the estate is distributed according to the terms of the will after Mr Jones’ death. The children, as beneficiaries, will receive their inheritance in accordance with their father’s wishes. This distribution may involve selling assets, such as property, and dividing the proceeds between them.

Example 2: Beneficiary of a trust
Mrs Smith sets up a trust for her grandchildren’s education. She places a sum of money in a trust and appoints a trusted friend as trustee. The grandchildren are named as beneficiaries of the trust, with the stipulation that the funds are to be used only for their educational expenses. The trustee manages the trust funds and disburses money to cover the grandchildren’s school fees, books and other educational expenses in accordance with the terms of the trust. In this case, the grandchildren are the beneficiaries who receive the benefits of the trust, but they have no control over how the trust’s assets are managed.

This website is for informational purposes only and may contain inaccuracies. It should not be used as a substitute for professional legal advice.