Business, Legal & Accounting Glossary
In Inheritance Law, The beneficiary is the person who will receive the benefits and/or property in the event of the insured’s death as outlined in the will of the deceased.
n. a broad definition for any person or entity (like a charity) who is to receive assets or profits from an estate, a trust, an insurance policy or any instrument in which there is distribution. There is also an “incidental beneficiary” or a “third-party beneficiary” who gets a benefit although not specifically named, such as someone who will make a profit if a piece of property is distributed to another.
A beneficiary (also, in trust law, referred to as the cestui que use) in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. The beneficiary of a life insurance policy, for example, is the person who receives the payment of the amount of insurance after the death of the insured. The beneficiaries of a trust are the persons with equitable ownership of the trust assets, although the legal title is held by the trustee. The term is also used in the context of a letter of credit for the party receiving the money related thereto. Beneficiaries in other contexts are known by other names: for example, the beneficiaries of a will are called devisees or legatees according to local custom.
A series of beneficiaries may be designated in many cases to designate where the assets will go if the primary beneficiary or beneficiaries are not alive or do not qualify under the restrictions in the given contract or legal instrument. Most commonly the restriction is that the beneficiary be alive, which, if not true, allows the assets to pass to the contingent beneficiaries. Other restrictions such as being married or more creative ones can be used by a benefactor to attempt to control the behaviour of the beneficiaries. Some situations such as retirement accounts do not allow any restrictions beyond the death of the primary beneficiaries, but trusts allow any restrictions that are not illegal or for an illegal purpose.
The concept of a “beneficiary” will also frequently figure in contracts other than insurance policies. A third-party beneficiary of a contract is a person who, although not a party to the contract, the parties intend will benefit from its provisions. A software distributor, for example, may seek provisions protecting its customers from infringement claims. A software licensor may include provisions in its agreements which protect those who provided code to that licensor.
Life insurance beneficiaries can generally be paid ten to twenty-one days after the insurance company has reviewed the claim and agrees no fraud has been committed. The life insurance company usually requires the death certificate when making an insurance claim, and the claimants must complete the proper forms and send them to the insurance company.
Other benefits also have beneficiaries who may be entitled to compensation in the event of death or disability. For instance, workers’ compensation pays benefits to surviving beneficiaries if a claimant is injured or killed performing their work functions. Social Security Disability Insurance (SSDI) also allows surviving disability benefits to be paid to the surviving spouse and minor children of a disabled or diseased worker.
If any beneficiary does not survive the Settlor for a period of 30 days then the Trustee shall distribute that beneficiary’s share to the surviving beneficiaries by right of representation.
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This glossary post was last updated: 26th April, 2020 | 2 Views.