“What’s a beneficiary, and what do I need to know before writing my will?”

These are questions you need to ask yourself to ensure that the people in your life benefit from your passing.

Naming beneficiaries in your Will gives you full control over the distribution of your assets in the event of your death.

Our team of financial experts have drawn up the ultimate guide to beneficiaries. 

Read on to feel confident that your property is going to the right people, even after you’ve passed away…

Beneficiaries vs. Executors

There’s a difference between beneficiaries and executors.

Let’s find out. 

What’s a Beneficiary?

A beneficiary is a person or organisation who receives monetary benefits from your estate upon your death. 

The beneficiaries of your property are named in your Will.

Examples of the benefits passed down in your Will can be money, property, or physical assets left behind when you die. 

A beneficiary can be one, or multiple people who receive all, or part of your estate after taxes, debts, and special gifts have been managed by an executor.  

What’s an Executor?

An executor is a single or group of individuals who you appoint to notify your named beneficiaries after you’ve passed away. 

The executor oversees the distribution of your property stipulated in your Will.

Anyone can be named an executor of a will. 

The most commonly named executors include:

• Friends
• Relatives
• Solicitors (financial specialists)

Your executor will take on the legal processes in which the assets of your Will are administered to its named beneficiaries, often with the help of a solicitor in order to be completed legally.

If a solicitor or financial professional is hired as the executor of your Will, your estate will cover the costs of their contract. 

The distribution of your assets is called probate.

How Do Beneficiaries Work?

Any person or organisation named as a beneficiary receives the assets stipulated in your Will.

Any of your property can be named in your Will, including:

• Real estate
• Financial assets such as cash, bonds, and stocks
• Personal property such as art, vehicles, and jewellery
• Pets
• Family heirlooms

Your Will can also include various conditions. The most common conditions pertain to factors such as age and marital status. 

If a person or organisation is aware that they have been named as a beneficiary in your Will, they don’t have a right to see the Will until probate is granted. 

What Does It Mean if I’m a Beneficiary?

If you’re a beneficiary of someone who’s deceased, it means that you’ll receive your inheritance once probate has been granted. 

The executor handles the probate of the Will.

As a beneficiary, you’re not responsible for managing Inheritance Tax. This falls under the responsibilities of the executor.

So when will you receive your inheritance?

You won’t receive your inheritance until Inheritance Tax has been paid.

There’s no time limit in which the executor has to distribute your inheritance if you’ve been named a beneficiary on a Will.

If you believe an executor is acting dishonestly, inappropriately, or delaying the procedure, you are within your right to take legal action.

What Are the 2 Types of Beneficiaries?

The 2 types of beneficiaries are primary beneficiaries and contingent beneficiaries. 

Let’s go over the details.

Primary Beneficiary

A primary beneficiary is a single, or list of beneficiaries who are first in line to receive your assets once you’ve passed away. 

An example of this would be if a father has listed his son as the primary beneficiary, but not his daughter. When the father dies, the son receives the entire inheritance. 

Contingent Beneficiary

A contingent beneficiary is a person, or group of people, named in your Will who receives the inheritance if your primary beneficiary is deceased or can’t be contacted. 

If your primary beneficiary is unable to inherit your property, all assets will be distributed to the contingent beneficiary or beneficiaries named in your Will.

Let’s continue the example used above…

If the son has been named the primary beneficiary, and the daughter has been named the contingent beneficiary, if the son can’t claim the inheritance, it will be passed down to the daughter.

Multiple people or organisations can be named primary or contingent beneficiaries in your Will. 

Who Can Be a Beneficiary?

A beneficiary can be any person, multiple people, an organisation, or multiple organisations named in your Will.

Below is a list of examples:

• Your spouse
• Your children
• Your relatives 
• Friends
• Charity

You can name anyone you want as a beneficiary.

What Happens if I Don’t Name a Beneficiary in My Will?

If you don’t name a beneficiary in your will, the beneficiaries of your estate will then be decided by the Rules of Intestacy. 

The Rules of Intestacy are a complex set of laws that decide how your assets will be distributed when you die if you don’t have a valid Will. 

These laws will categorise your immediate and distant family members in a priority list for the distribution of your estate.

The order is as follows:

1. Spouse or Civil Partner

If you die without a valid Will, your spouse or civil partner will inherit all of your assets. 

These assets can include:

• Property
• Personal possessions  
• The first £270,000 of your estate
• Half of anything over £270,000 of your estate 

Anything more than £270,000 of cash inheritance will be halved and distributed to any living children. The other half will be inherited by your spouse or civil partner.

If you have a partner who isn’t your spouse or civil partner according to the law, they’re not entitled to any inheritance unless they’ve been named a beneficiary.

2. Children

If you’re unmarried or not in a civil partnership, but you have children, the entire estate will be split evenly between your children.

A single child will inherit the entire estate in this case.

3. Living Relatives

If you have no spouse, civil partner, or children, your estate will be distributed between your living relatives.

This includes:

• Parents
• Siblings
• Grandparents
• Aunts
• Uncles

The inheritance will be split evenly between the living relatives.

4. The Crown

If you have no spouse, children, or living relatives, your assets will be given to The Crown.

If no beneficiary has been named, your property can be tied up in probate for years. This makes it vital that you have a valid Will legally drawn up.

Why Are Beneficiaries Important?

Beneficiaries are important because they give you control over your property after you’ve passed away. 

Naming beneficiaries in a Will gives you confidence that your assets will be distributed in a way that you see fitting, giving you the freedom to decide what happens to your property even after you’ve died.

Not having a valid Will also causes complex legal complications which delay probate for years. 

Common Questions

In Conclusion

Understanding what a beneficiary is, and the importance of naming one, is the first step to ensuring that your property is distributed fairly, safely, and swiftly to your family and friends. 

By writing up a valid Will, you negate any legal complications, frustrations, or delays of probate once you have passed away.

If you care about how your property is dispersed once you have passed on, naming beneficiaries is an absolute priority.