A Guide to Naming Beneficiaries

It is important that you appoint will beneficiaries who will inherit from your will. Depending on what is to be bequeathed and how, whether one person is chosen or multiple people are chosen as the beneficiaries of the will, the choice completely belongs to the creator of the will.

What is a will beneficiary?

A beneficiary is a person or party that is selected by the creator of a will to become new owners of their estate and belongings in the event of their passing away. It is common for one to appoint a person dear to them such as a family member, but organizations and charities can also be listed as beneficiaries in a will.

A person can bequeath anything they possess to those he/she has appointed to benefit from the will. These could be anything from family heirlooms such as jewellery to real estate. In the case of money, it is important to ensure that the account where your money is being held such as a bank account, life insurance policy or a retirement account’s beneficiary is the same as your will’s beneficiary. Reason for this is that the beneficiaries stated on an account will be the ones considered first as beneficiaries of the account owner’s money over the ones listed in the will. In order for one to update account beneficiaries, an official request in the form of a “beneficiary designation” must be made with the financial institution holding the account. The process of updating your account beneficiaries is hassle free, you merely need to complete a brief form with the details of the new beneficiaries.

Who beneficiaries of will?

Anyone appointed by the creator of the will, besides a witness can be a will’s beneficiary. They do however have to be alive to benefit from the will as a dead person cannot be a beneficiary.  Beneficiaries can either be the will creator’s wife/husband, children and/or anyone dear to them. They can inherit either all or a portion of the will creator’s estate or a particular possession that is owned by the creator, the manner with which the creator’s possessions are divided is entirely his/her prerogative. 

Appointing a spouse

It is common for a married will creator to appoint his/her spouse as the one to inherit from the will, but it is not a requirement for the spouse to be the sole beneficiary. Spouses are however entitled to a portion of the creator’s property and belongings according to some states. This entitlement depends on if the owner of the property lived in a “common law state” or a “community property state”.

Many state laws require that spouses inherit from the will even if it is a portion of it. The portion differs from state to state with the general guideline being anywhere from one third to half of the property. Should the will bequeath the spouse far less than the stipulate requirement, then the spouse with the help of a probate lawyer can contest it. It is advisable therefore for the creator of the will to always seek legal advice from accredited legal practitioners should he/she wish to partially or completely omit their spouse from the will.

Those states that recognize community property, the spouse are not protected by the same law. These states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. The reason for this is due to the fact that spouses residing in these states claim equal rights to each other’s property for the duration of their marriage. The prerogative belongs to the creator of the will therefore as to how number to bequeath his/her spouse in the will.

Choosing your children

The term “your children” in a will refers to your biological offspring, those born inside and outside of marriage as well as those that you acquired through legal adoption. This provision excludes step children unless legally adopted by you. This does not mean that you are limited as to whom to leave your property to, you can leave your property to either your children or stepchildren or both.

The law does not have provisions for children in the same way that it does for spouses when it comes to inheriting from a will. This means that you can completely omit a child from your will, therefore barring them from inheriting from you.

Choosing a minor

Minors can beneficiaries in a will, but they will not be able to control their inheritance soon after receiving it. It is usually the minor’s guardian who will control the inheritance on behalf of the minor until he/she comes of legal age. The inheritance is often kept in a trust and is controlled by his/her guardian in the trust. It is only when the minor turns 18 years old that he/she claims rightful ownership of his/her inheritance and is able to control it for his/herself.

Choosing an organization or charity

Organizations or charities can also be listed as will beneficiaries. It is important to have the organization’s name listed correctly in your will so as to give clarity to the executor of will.

Choosing other beneficiaries

Your property can be inherited by anyone you choose; it could either be your neighbours, loved ones or friends or absolutely anyone.

How to name beneficiaries

The names of the beneficiaries listed on your will need to be clear and exact, this is to ensure that the executor of your will carries out your expressed wishes after your passing away. It is important therefore to use your beneficiaries’ names as they appear on their legal documents. For further clarity, it is important to add the nature of your relation to your beneficiaries e.g. mother, brother or spouse. Should more than one of your will beneficiaries bare the same name, be sure to add a distinguishing factor to their name such as my sister, Jane and my aunt, Jane.

In the case of an organization, it is strongly advisable that you liaise with the organization to ascertain the right name to use in the will. The reason for this is because some organizations may have more than one name and the legal name will be considered in the case of a will, therefore to prevent confusion, the right name must be used.

One person can be appointed in your last will and testament whom you can leave all your inheritance to or you can have multiple beneficiaries to whom a portion can be proportioned to each. Should you choose to have more than one beneficiaries; the choice is yours as to how your property will be divided amongst them. Your property can be unevenly distributed amongst your beneficiaries e.g. 30% of your property can be left to your spouse, 20% to your son, 25% to your mother and another 25% to your daughter. You could also bequeath particular items to your beneficiaries. This option suits one whom has special items heirlooms you have in your possession that you would like to leave to someone.

Once you have appointed someone as a beneficiary, you also have to make provisions for an alternative should the initial beneficiary also pass away as they will not be able to benefit from your will. This ensures that you are able to appoint another beneficiary yourself should the initial beneficiary be unable to inherit from your will. Also known as a contingent beneficiary, he/she will therefore inherit the same portion of the property that was left to the initial beneficiary. Should your death be preceded by your beneficiary, then the court will proportion the property in your will accordingly (as determined by the law of that state).

No beneficiary named

In the case of a person dying without leaving a will, the law in that state will decide on the beneficiaries of your property. When a person dies without leaving a will behind, this is called interstate and this is what also determines who will inherit what from the deceased. This arrangement may not necessarily be according to your family’s desires.

Bank of Mom & Dad

Bank of Mom & Dad See the table below for % of 21-39 year olds who have relied on parents financially since the start of