As an executor, you are learning lots of new terms that you’ve probably never heard of before. One of the most important to your executor role is understanding what a beneficiary is. In this post, we’ll cover some of the most frequently asked questions we get about beneficiaries as it relates to your role as executor.
Because an executor is the person named in a will who is responsible for the final administration of the deceased person’s estate, we’ll look at beneficiaries in the context of wills. In the context of a will, a beneficiary is a person or entity designated to receive assets from the will-writer’s estate.
A beneficiary can be any person or entity. The person part is simple, but what is an entity? An entity can be anything from a non-profit organization or charity to a trust or corporation. The key when naming a beneficiary is to be as specific as possible. If you name John Smith as your beneficiary, but you have a brother John Smith and your son is also named John Smith, this could cause a problem for your executor as they are administering your estate. The same goes for entities. If you name the First Baptist Church as a beneficiary, and there is the church were you were a member for most of your life and the church in the town in which you resided only a few years before you died, which church did you mean? Providing more specific information like “my son, John Smith, presently residing in Houston, Texas” or “the First Baptist Church of Liberty, Indiana” will be a better way to ensure the person or entity you want to be your beneficiary actually is.
There is no required number of beneficiaries for a will. You can designate as many beneficiaries as you like. Some people choose to leave everything to a single beneficiary, while others divide their estate among multiple individuals or organizations. When naming multiple beneficiaries, it’s important to specify the percentage or portion of the estate each one will receive to avoid confusion or disputes. It is also a good idea to list one or more contingent beneficiaries, especially if you leave everything to a single beneficiary.
If the will contains more than one beneficiary, and a person dies or an entity closes before the will-writer dies, what happens to the assets designated for that person or entity? Much depends on the language in the will. The will-writer should tell their estate attorney as much as possible about how they want situations like this to be handled. One or two words can make a big difference. Let’s consider an example. Let’s say you give all of your assets equally to your three children, but one dies before you do. Using certain wording in your will would allow the two remaining children to split your estate assets equally. But other wording would allow the children of your deceased child (your grandchildren by this child) to receive the share their parent would have received. And still other wording would allow those grandchildren to move up and take a greater individual share, by reducing the share of your remaining children. Wording is important and communicating your wishes to your attorney so your will can be written according to your desires is critical!
While the executor is responsible for administering the estate according to the terms of the will, a crucial aspect of the executor role is distributing assets to the beneficiaries, as set out in the will. An executor should clearly communicate with the beneficiaries named in the will to ensure the estate is settled as easily and efficiently as possible, while following the will and the applicable laws.
You can absolutely name someone to be your executor and also name that person as a beneficiary. This is incredibly common because often the executor is a trusted family member or close friend. However, it’s important for the executor to act impartially and fulfill their fiduciary duties, ensuring that the estate is managed and distributed according to the will’s terms. If conflicts of interest arise, having clear and well-documented instructions in the will can help the executor mitigate potential disputes.
Understanding what a beneficiary is and considering frequently asked questions about beneficiaries will help you as you execute the executor role. Executor.org’s customized plan and a great team of professionals around you will help you conquer your executive duties.