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Definition of 'Third Party Beneficiary'
A person who will benefit from a contract made between two other parties. This third party beneficiary was not a party to the contract itself, but if the contract is fulfilled, the third party stands to realize a benefit. Under certain circumstances, the third party has legal rights to enforce the contract or share in its proceeds. For example, if they can prove that they were an intended beneficiary and not an incidental beneficiary.
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Investopedia explains 'Third Party Beneficiary'
There are certain standards that need to be met for the third party beneficiary to have legal rights to enforce a contract or to share in the proceeds. For example, Mary agrees to buy a car as a gift for Katie. If the dealer (Bob) is notified and orders the car, but Marry refuses to go through with the contract, the dealer can sue for the damages. This is because Bob would be financially hurt, even though he is not a party of the contract. In terms of insurance policies, when an individual buys an insurance policy, a contract is formed between this individual and the insurance company, but a third party will receive the insurance payments. If the individual who bought the policy and whose name the policy is under passes away, the third party beneficiary has legal right to receive the insurance benefits and to sue either party if the insurance contract is not upheld.
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Search results for 'Third Party Beneficiary'
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http://www.investopedia.com/articles/pf/08/trust-basics.asp
... document, and must do so in the best interests of the beneficiary. This person may
be the grantor, the spouse or adult child of the trust, or a third party. ...
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http://www.investopedia.com/articles/pf/07/draft_will.asp
... at the time the will is drafted and was influenced by some opportunistic third party. ...
next in line to receive this asset if your chosen beneficiary dies before ...
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http://www.investopedia.com/university/estate-planning/estate-planning6.asp
... document, and must do so in the best interest of the beneficiary. This person may
be the grantor, the spouse or adult child of the trust or a third party. ...
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http://www.investopedia.com/articles/pf/09/structured-settlements.asp
... The assigned method: The settlement obligation is assigned to a third party, which
in ... are not taxable, or may significantly reduce a beneficiary's taxes as ...
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http://www.investopedia.com/articles/retirement/06/PrivateAnnuity.asp
... Next, the trust sells the asset to a third party without incurring an income tax
liability because the sales price is the same as the purchase price. ...
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http://www.investopedia.com/university/insurance/insurance2.asp
... Insurance is not meant to be a profit center for the policy's beneficiary. ... The person
or company transferring the risk of loss to a third party through a ...
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http://www.investopedia.com/articles/tax/10/nontaxable-invome-sources.asp
... This could be health insurance provided through your employer by a third party
(like Aetna or ... But if you are the beneficiary of an estate that falls into the ...
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http://www.investopedia.com/articles/tax/09/owe-nothing-federal-tax-return.asp
... interest based on state law (that is, if you indicated no beneficiary), and sometimes ...
addition, if you make a gift of your policy to a third party (except to ...
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http://www.investopedia.com/articles/retirement/10/demise-defined-benefit-plan.asp
... As a result, third party institutional investment consulting firms, actuarial firms ...
payout option employees will select, because their beneficiary status may ...
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http://www.investopedia.com/exam-guide/series-7/retirement/custodial-accounts.asp
... The plan must have a beneficiary designation. ... The state treasurers office
or third party managers, manage the 529 plan assets. ...
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