Beneficiary

A beneficiary in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. The beneficiary of a life insurance policy, for example, is the person who receives the payment of the amount of insurance after the death of the insured. The beneficiaries of a trust are the persons with equitable ownership of the trust assets, although legal title is held by the trustee. The term is also used in the context of a letter of credit for the party receiving the money related thereto. Beneficiaries in other contexts are known by other names: for example, the beneficiaries of a will are called devisees or legatees according to local custom.

A series of beneficiaries may be designated in many cases to designate where the assets will go if the primary beneficiary or beneficiaries are not alive or do not qualify under the restrictions in the given contract or legal instrument. Most commonly the restriction is that the beneficiary be alive, which, if not true, allows the assets to pass to the contingent beneficiaries. Other restrictions such as being married or more creative ones can be used by a benefactor to attempt to control the behavior of the beneficiaries. Some situations such as retirement accounts do not allow any restrictions beyond death of the primary beneficiaries, but trusts allow any restrictions that are not illegal or for an illegal purpose.

The concept of a "beneficiary" will also frequently figure in contracts other than insurance policies. A third party beneficiary of a contract is a person who, although not a party to the contract, the parties intend will benefit from its provisions. A software distributor, for example, may seek provisions protecting its customers from infringement claims. A software licensor may include provisions in its agreements which protect those who provided code to that licensor.