Definition of BENEFICIARY: (noun) / one that benefits from something; the person named to receive proceeds or benefit; a person or entity designated by another to receive a gift of money or property
A beneficiary under a last will and testament is known as a testamentary beneficiary. For example, if John executes a last will and testament that states “I leave the sum of $1,000.00 to Jane”, then Jane is a testamentary beneficiary of John’s will.
A will can provide for gifts to any number of individuals or organizations. Therefore, there can be many beneficiaries of the same will. When a will provides for only one beneficiary, that beneficiary is referred to as the sole beneficiary. A will can also have many different types of beneficiaries.
Typically, a will provides for both primary and contingent beneficiaries. A primary beneficiary is the person who is designated to receive a gift. A contingent beneficiary is someone designated to receive a gift but only upon the happening of a certain event. In most wills, that “certain event” is the failure of a primary beneficiary to survive the person executing the will. For example, John makes a will that states, “I leave the sum of $1,000.00 to Jane. If Jane shall fail to survive me, I leave $1,000.00 to Henry”. In this case, Jane is the primary beneficiary and Henry is the contingent beneficiary.
A will can provide for other contingencies. For example, John could put a provision in his will stating, “I leave my house located in Queens to my son, Dave, but only if Dave completes four years of college.” Dave will not receive the house in Queens unless the contingency occurs, namely, if he completes four years of college.
A trust can have similar provisions to those in a will, in which case the receiver of the gift is referred to as a trust beneficiary. Further, beneficiaries can be designated on various types of assets including bank accounts and insurance policies.