You can’t take your belongings with you when you pass away, but you can make sure that you take care of your loved ones by way of a Will, trust or other legal documents that ensure a safe future.
There are some types of assets like life insurance that can be transferred to another person without having to go through complicated processes after your demise. Your family will have no right whatsoever on your property while you are still alive.
Below we have mentioned rights of beneficiaries that will help you understand things you will look forward to when making someone a beneficiary in your estate plan.
Normally, beneficiaries are people who may inherit assets mentioned in your Will, retirement account, life insurance, annuity or trust. Even a charity can become a beneficiary provided it is legally capable to accept your request. For example, you cannot make your pet the sole beneficiary of your wealth since a pet possesses no legal ability to accept the money.
If you name a legally incompetent adult or a child as a sole beneficiary, the court will appoint a conservator or guardian to handle the money until the beneficiary is able to handle the money on their own.
There are two types of beneficiaries – primary and contingent beneficiary. Let’s get to know the rights of each of these beneficiaries.
After you pass away, the primary beneficiary will be the first in order to inherit the assets left behind by you. It is not necessary that only a single individual be a primary beneficiary.
You are free to name multiple individuals as primary beneficiaries and the assets will be divided amongst them equally after your demise. For example, if you have a life insurance policy of £100,000 and you name your daughter as the primary beneficiary, she will inherit the entire £100,000.
If you name both your daughter and son as your primary beneficiaries, the amount will be equally divided among two and each will receive £50,000. You are even allowed to choose the percentage of inheritance to be split between the two beneficiaries, maybe give your daughter £60,000 and your son £40,000.
A contingent beneficiary is liable to receive the inheritance in case a primary beneficiary could not be located, refuses the inheritance or passes away before you. A contingent beneficiary is second in order to receive the inheritance and will not receive anything if the primary beneficiary accepts the inheritance.
For example, if you name your son as the primary beneficiary of your life insurance policy and your daughter as the contingent beneficiary, your son will receive the entire £100,000 and your daughter receives nothing. But, if your son passes away before, the contingent beneficiary, which is your daughter, will receive the entire £100,000.
If you feel that your beneficiary is not qualified enough, you can create some contingencies that will prevent them from inheriting your assets by attaching some conditions to your gift. For example, you may name your daughter as your beneficiary, but put a condition that bars her from receiving inheritance until she completes her higher education or marries.
In a similar way, you can leave your real estate property to your daughter, provided she inhabits the property for a specific amount of time before receiving the complete ownership.
If you are alive, the beneficiaries do not have any right over your assets, so as long as you are alive you have every right to change the beneficiary designation as you see fit. If you get divorced or marry again you can make changes to your beneficiary designations in your retirement accountants, life insurance policy, bank accounts and other assets.
Changing a beneficiary is not a difficult process, all you have to do is fill up a form provided by the company that manages all of your assets.
Depending upon where you reside, some of the beneficiary designations may stand invalid after the birth of a child, marriage or divorce, therefore, it will be better for you to prepare yourself and create a new Will instead of depending on the law that decides where your assets go.
We hope the above article helps you understand the beneficiary rights if you are preparing a Will right now. If you have no idea about how its done, you can learn how to make a Will at home.