Understanding Beneficiaries: Who They Are and What They Receive

Beneficiaries are individuals or organizations that receive benefits or funds from a trust, will, or other legal arrangement. Beneficiaries can be named in a variety of documents, including:

1. Wills: A will can name beneficiaries who will inherit specific assets or property after the death of the testator (the person who made the will).
2. Trusts: A trust can name beneficiaries who will receive income or principal from the trust assets.
3. Insurance policies: Life insurance policies can name beneficiaries who will receive the policy proceeds upon the death of the policyholder.
4. Retirement accounts: Retirement accounts, such as 401(k) plans or IRAs, can name beneficiaries who will inherit the account assets after the death of the account holder.
5. Estate planning documents: Other estate planning documents, such as a living trust or a healthcare power of attorney, can also name beneficiaries.

Beneficiaries are important because they receive the benefits of the trust, will, or other legal arrangement. They may receive assets, income, or other benefits, and they may be responsible for paying taxes or other expenses related to the assets they receive. Beneficiaries are typically chosen by the person who creates the trust, will, or other legal arrangement, and they can be changed or updated as needed.