Beneficiary

AAA

DEFINITION of 'Beneficiary'

Anybody who gains an advantage and/or profits from something. In the financial world, a beneficiary typically refers to someone who is eligible to receive distributions from a trust, will or life insurance policy. Beneficiaries are either named specifically in these documents or they have met the stipulations that make them eligible for whatever distribution is specified.

INVESTOPEDIA EXPLAINS 'Beneficiary'

Typically, any person or entity can be named as a beneficiary of a trust, will or life insurance policy and the one distributing the funds (the benefactor) can put various stipulations on the disbursement of funds (e.g. the beneficiary must have attained a certain age or be married). There can also be tax consequences to the beneficiary. For example, while the principal of most life insurance policies is not taxed, the accrued interest might be.

RELATED TERMS
  1. Beneficial Interest

    The right to receive benefits on assets held by another party. ...
  2. Custodial Agreement

    An arrangement whereby one holds an asset or property on behalf ...
  3. Bare Trust

    A basic trust in which the beneficiary has the absolute right ...
  4. Marital Trust

    A fiduciary relationship between a trustor and trustee for the ...
  5. Trust Fund

    A trust fund is a fund comprised of a variety of assets intended ...
  6. Designated Beneficiary

    The person who determines how long the retirement plan will survive ...
RELATED FAQS
  1. What are the risks involved in a banker's acceptance?

    College savings accounts are excellent ways to encourage saving for future college costs. Contact your investment professional ... Read Full Answer >>
  2. Can an IRA owner disclaim his widow's account but exclude one spendthrift contingent ...

    F rom your question, it appears that the widow is the sole primary beneficiary, in which case any portion properly disclaimed ... Read Full Answer >>
  3. How can I reduce the taxes on my inherited retirement assets?

    Many beneficiaries miss out on one of the most significant tax deductions for inherited retirement-plan assets; the income ... Read Full Answer >>
  4. How can I get information about my deceased husband's retirement account if his employer ...

    That is unusual. Contact his employer again and if you are not satisfied with the response, ask to speak with a supervisor ... Read Full Answer >>
  5. How does the trust maker transfer funds into a revocable trust?

    Once a revocable trust is created, a trust maker transfers funds or property into the trust by including them in a list with ... Read Full Answer >>
  6. What is the difference between a revocable trust and a living trust?

    A revocable trust and living trust are separate terms that describe the same thing: a trust in which the terms can be changed ... Read Full Answer >>
Related Articles
  1. Retirement

    Designating A Trust As Retirement Beneficiary

    Designating a trust as your IRA beneficiary can be beneficial, but it requires proper planning to avoid problems.
  2. Insurance

    Keep Your Pet's Trust

    Find out how to protect and provide for your pet after you pass away.
  3. Home & Auto

    Can You Trust Your Trustee?

    Ignorance and incompetence can cost you money. Make sure your trustee is up to the task.
  4. Taxes

    September 30: A Key Date For Retirement Plan Beneficiaries

    Unless certain action is taken by this date, distribution rules can put the youngest inheritor at a disadvantage.
  5. Retirement

    Life Insurance: How To Get the Most Out Of Your Policy

    There are many benefits to owning a life insurance policy - if you get the right one for you.
  6. Retirement

    Why You Should Draft A Will

    Don't trust the courts to follow your wishes - plan the distribution of your own assets.
  7. Options & Futures

    An Estate Planning Must: Update Your Beneficiaries

    Life changes make it time to rewrite your plan's designations.
  8. Options & Futures

    Live Longer, Retire Younger: Can You Do It?

    Use this vehicle to make sure your payout lasts as long as you do.
  9. Retirement

    Refusing An Inheritance

    Contrary to popular belief, inheriting assets isn't always a good thing. Find out what to do if you want to disclaim them.
  10. Taxes

    Designating A Minor As An IRA Beneficiary

    Leaving liquid assets like cash or securities to minors can be a complicated procedure. Make sure you understand how your gift will be distributed, managed and taxed.

You May Also Like

Hot Definitions
  1. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  2. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  3. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  4. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  5. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
  6. Touchline

    The highest price that a buyer of a particular security is willing to pay and the lowest price at which a seller is willing ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!