What is a beneficiary?
A beneficiary is a person who will receive some benefit under your Will.
Primary beneficiaries vs. contingent beneficiaries
There are different types of beneficiaries. Your "primary beneficiaries" are the individuals you name to receive the benefit, such as a cash gift, gift of property or the residue of your estate. Your "contingent beneficiaries" are individuals who you name to receive a benefit, but only if some prior event occurs, such as the prior death of a primary beneficiary.
For example, let's say you you wish to give (a) $500 to John Smith, if he survives you, but to give the $500 to John Smith's children if he predeceases you; and (b) the residue of your estate to your spouse, if she survives you, but to your children if your spouse does not survive you. In this example, John Smith and your spouse are primary beneficiaries. John Smith's children and your children are contingent beneficiaries, as they only receive a benefit if the specified event happens (John Smith or your spouse predeceases you).
When drafting a will, it is important to consider what should happen if a primary beneficiary predeceases you and, if necessary, to add a contingent beneficiary. In the example in the previous paragraph, you may only wish to give the $500 to John Smith. In that case, you would not name a contingent beneficiary for the $500 gift.
Specific Bequests vs. Residue
A bequest is a gift that you leave in your Will. There are different types of bequests:
- Specific Bequests - a specific gift of money, personal property (such as a necklace) or real estate.
- Residuary Bequest - a gift of all or a share of the "residue" of your estate, which is your estate remaining after your debts, taxes and other expenses have been paid and other specific bequests made.