Executor Dictionary A-Z

Beneficiaries – Not All Are Equal

Beneficiary: one who receives benefit under a trust, insurance policy or will

As an executor, you must know that not all beneficiaries have the same rights.

Here are three main types of estate beneficiaries:

1. Specific Gift Beneficiary

Sarah got a $5,000 gift from her grandmother under her will. Sarah is a specific beneficiary. She should sign a receipt for her gift so that the executor can prove she got her money. Of course, if Sarah is a minor, she cannot sign the receipt.

Beneficiaries who receive specific items (such as a car or specified investment) have rights limited to the specific property.

2. Residue Gift Beneficiary

Richard’s uncle’s will gave him a gift of the residue of his estate. After all expenses and specific gifts had been paid out, the estate residue was given to Richard. Richard is the residual beneficiary of his uncle’s estate.

As a residual beneficiary, Richard has the right to monitor how the executor handles the estate. The executor should obtain a full release from Richard before distributing the residue to him.

3. Contingent Gift Beneficiary

Carla and Colin are Richard’s children. Under the terms of the uncle’s will, they inherit only if their father is not alive at the time the uncle passed away. They are what are called contingent beneficiaries.

Contingent beneficiaries are on the sidelines so to speak. They may be entitled to nothing from the uncle’s estate. Contingent beneficiaries do not need to sign releases unless they inherit. They may have to be informed or consulted whenever an executor deals with any interest they have in the estate.

Tip: Respect all beneficiaries because they can bite an executor.