Beneficiary

A beneficiary is a recipient of a benefit. It can be an exporter or a seller of goods or services. Usually, this happens as a result of a specific project or from their property, which the beneficiary has previously given to another person in trust. In this case, it can be both legal and physical. The beneficiary may also receive income from shares or be the person in whose favor the issuing bank opens a documentary letter of credit.

In addition to the cases described above, the beneficiary may also be the recipient of charitable assistance. This is usually a non-profit organization, a local community, or an individual. It is important to remember that there may be several benefactors in such circumstances.

Main characteristics of the beneficiary

This person may appear in various processes related to the circulation of funds, such as insurance, pension, bank or brokerage account, etc. The key characteristics of the beneficiary:

• Receipt of income;
• Availability of various options for the distribution of the funds received;
• The beneficiary can be both an individual and a legal entity;
• The benefit is usually distributed in monetary form and has tax consequences.

How are beneficiaries designated?

In general, any person or organization can be named a beneficiary. However, there may be different conditions for receiving funds, especially when it comes to inheritance issues. It is also important to keep in mind the tax implications of such a process.

Beneficiaries can be appointed for private funds. In this way, the owner will be sure that the person designated by them will receive the assets. This greatly simplifies property registration and the inheritance procedure. It is important to remember that beneficiaries designated for financial accounts do not affect changes in the will.

What types of beneficiaries are possible?

There are two main types: primary and contingent. The first is the basic one. It is chosen by the owner of the financial account. This person receives all the assets. The second is a contingent beneficiary. They receive assets only if the primary beneficiary refuses to receive them for some reason or cannot take possession of them. It is important to remember that it is possible to name more than one contingent beneficiary and distribute assets among them.

The process of selecting and appointing a beneficiary

Designating beneficiaries for important assets makes it much easier to manage them. This is a kind of insurance in case something happens to the owner. A beneficiary can be appointed for the following types of assets:

• Bank accounts;
• Property;
• Pension accounts;
• Insurance policies;
• Brokerage accounts.

However, it is important to choose the right beneficiary. Usually, it is a family member whom the asset owner trusts. It can also be an organization, person, or being who needs care.

Usually, when opening financial accounts, companies are asked to provide information about beneficiaries. This is the most convenient time to appoint them. However, it can be done later by requesting documents that will allow you to designate one or more beneficiaries. You can also do it online. It is worth keeping copies of all documents just in case.

Designating one or more beneficiaries is a sign of orderliness of financial assets. It can also be a good opportunity to help your family members and those who need this help.