What is a Beneficiary? A Complete Guide
A beneficiary is a person or organization named to receive assets from an estate. Learn how beneficiaries work, the types and how to choose yours.
By Craig Parker
Assistant General Counsel, Trust & Will
A thorough Estate Plan is a critical part of protecting your loved ones and your legacy. You’ve likely heard the term “beneficiary” before, but do you know what it really means in terms of an Estate Plan?
Estate Planning may seem (and feel) like a convoluted, confusing concept, but just like so many other things in life, knowledge is power, and when you understand what the different pieces of an Estate Plan are, they suddenly start to come together. Beneficiaries are just one part of your plan, and knowing how they fit into the big picture is half the battle. Today, we’ll discuss what you need to know about beneficiaries, including:
What is a Beneficiary
A beneficiary is a person or organization you name to receive money, property or other assets after you pass away. Beneficiaries are an important part of your plan, as they give purpose and guidance for what you’re leaving behind. Common places to name beneficiaries include:
Life insurance policies
Last Will and Testament
Retirement accounts like a 401(k), 403(b) or IRA
Bank accounts with payable-on-death (POD) designations
But while some beneficiaries are named directly on policies or accounts, you’ll also have them in your Last Will and Testament, which is what we’ll focus on in this article.
Types of Beneficiaries
Primary Beneficiary: A primary beneficiary is the person or organization named as first in line to receive an asset or benefit. They can be named in a Will or Trust, or as we noted earlier, identified on a policy or account.
Contingent Beneficiary: A contingent beneficiary is named as the “second in line” to receive benefits. If the primary beneficiary passes away before the owner, or can’t or won’t accept the inheritance, proceeds would generally go to any named contingent beneficiary.
How to Choose a Beneficiary
When figuring out who should be your beneficiary, whether you are single or married could have an impact on your decision. Choosing a beneficiary can be difficult in some cases. For those with complicated family dynamics, or for anyone who may not be certain who they want to leave some or all of their estate to, it might not be so cut and dry. In these cases, trying to decide who should be my beneficiary can feel like a lot of pressure.
A few questions can help you narrow down your list, though. Think about the following:
Does anyone depend on you financially?
Are you married?
Do you have children?
All of these factors could come into play when you’re deciding who will benefit from your estate as a beneficiary. But keep in mind, there are few hard and fast rules to naming beneficiaries. The choice is largely yours, though workplace retirement plans like a 401(k) may require your spouse’s written consent if you want to name someone else as beneficiary.
One more note about choosing beneficiaries. They don’t have to be a person or people. Many Wills and Trusts name charities or organizations as beneficiaries.
What is the Role of a Beneficiary: Commonly Asked Questions
Understanding the role a beneficiary plays in Estate Planning is important, whether you’re just starting to create your plan or updating an old Estate Planning document. Knowing what a beneficiary is, what types there are and how to choose the right one(s) will all help you feel more confident in your decision.
But even if you understand all of that, there are still likely to be questions and issues that arise as you develop your plan. We cover some of the most common questions about beneficiaries below.
What Information is a Beneficiary of a Will Entitled to?
A beneficiary is entitled to more than just some portion of the monetary value of an estate. They also have the right to be kept informed in a timely manner about the basics of the estate as it’s settled. It’s also reasonable to expect to hear about dates for distributions, as well as explanations about any delays. Beneficiaries can generally see the terms of the Will, which typically becomes part of the public record once it’s admitted to probate. Finally, if the estate becomes involved in litigation, beneficiaries usually have the right to know.
What Happens if a Minor is a Beneficiary?
Minors generally can’t receive inherited assets directly, so a trusted adult is named to manage the inheritance until they come of age. A Living Trust is a great way to do this, since it lets you set provisions for how and when a minor beneficiary receives specified assets.
What is a Secondary Beneficiary?
A secondary beneficiary is another name for a contingent beneficiary, who is essentially the second in line to receive assets or benefits. They would step in if the primary beneficiary passes away before the estate owner or can’t or won’t accept the inheritance.
What is a Beneficiary Identification Code?
Beneficiary Identification Codes (BICs) are the codes used to identify what type of benefit(s) a recipient of Social Security is receiving. Because of the word “beneficiary” in the name, this term may be confused with a beneficiary you’d see in an Estate Plan, but really the two aren’t related.
How to Find Out If You Are a Beneficiary of a Trust
Most often, the Trustee would inform you that you’re a beneficiary of a Trust after the Trust owner passes away. State law usually sets a deadline for this notice. In California, for example, Trustees generally have 60 days from the Trust owner’s death to notify beneficiaries.
What Happens If You Do Not Name a Beneficiary?
If you do not name a beneficiary in your Will, or if a beneficiary predeceases you and you didn’t name an alternate, state law, along with how your Will is written, will dictate next steps. In many states, if the deceased beneficiary was a close relative, their share can pass to that person’s descendants. Otherwise, assets are generally distributed to your own heirs under state intestacy laws.
Which States Have Beneficiary Deeds?
You may not have heard the term, but a beneficiary deed is more commonly known as a Transfer on Death, or TOD, deed. It lets a property owner name who would inherit real estate after they pass away, which can allow the property to skip probate. More than 30 states, plus the District of Columbia, allow some form of beneficiary deed, and the list keeps growing. For the current list, see our guide to which states recognize a beneficiary deed.
Who Has More Rights, a Trustee or the Beneficiary?
Both a Trustee and a beneficiary have rights when it comes to the Trust in question. The biggest differences show up around responsibilities. A Trustee has much more to handle, but there is also a layer of protection for the sizable job they take on as they work to settle the Trust. While a beneficiary can expect open communication, timely payouts, financial reports and an explanation of any delays, a Trustee generally isn’t personally responsible for debts of the estate as long as they carry out their duties properly. Nor is a Trustee required to explain the choices the Trust maker made when writing it.
How to Write a Beneficiary Letter
A beneficiary letter is an informal note you leave alongside your Estate Plan to share a personal message or practical guidance with a beneficiary. Beneficiary letters can really be whatever you’d like them to be. It’s common (though not required) to write them with a personal touch or feel, commenting on your hopes for their future or noting something special about your relationship. The most important thing to remember when writing a beneficiary letter is you want to be specific and clear to avoid any confusion.
How to Pay Beneficiaries of a Will
Before beneficiaries of a Will can be paid, a bank account is usually set up in the name of the estate. However, occasionally this step can be skipped. For example, in some states (like California) there are “small estate” versions of probate, which essentially allow a bank to write a check payable to the beneficiary.
With a full probate, it’s more common to see a short-term account set up for the estate that acts like an operating account. It will receive any income (like tax refunds) and pay out expenses (like appraiser and cleanup fees), then make a final distribution to the beneficiaries of whatever is left.
Writing your Estate Plan now is a great way to protect those you one day leave behind. In fact, it could just be the most important thing you ever do. A good Estate Plan identifies beneficiaries who’ll receive some or all of your estate, and makes clear who, what and how you want to leave it.
Ready to name a beneficiary for your Trust or Will? Whether you have an existing Estate Plan, or you need to start fresh, you can count on Trust & Will. Learn more about Trust & Will’s Estate Planning options today.
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Last updated: September 2, 2026
