Beneficiary

Many financial products allow you to name who should receive the money if you die. Life insurance policies, pensions and retirement accounts usually ask for a beneficiary when they are set up. Wills and trusts also name beneficiaries for the assets they cover.

For example, a person might name their spouse as the main beneficiary of a life insurance policy and their two children as contingent beneficiaries, who would receive the money if the spouse had died first.

Keeping beneficiary designations up to date is important. In many places, the beneficiary named on an account or policy receives the money directly, even if a will says something different. A forgotten designation naming a former partner, for example, could send money to someone the account holder no longer intended to benefit.

Beneficiaries of a trust have rights to receive income or assets according to the trust's terms, while the trustee manages the assets on their behalf. Naming a beneficiary can also help money pass more quickly, because it may avoid lengthy legal processes after death.