What Does Sole Beneficiary Mean?

By Jim Thomas

The formal definition of a beneficiary for legal purposes, according to Black's Law Dictionary, is one for whom a trust is created. In everyday usage, a beneficiary is the designated recipient of benefits specified in a legal document, such as wills, trusts, pension plans and insurance policies. If you are named as the sole beneficiary, you are entitled to all of the benefits that pass to you in such documents.

The formal definition of a beneficiary for legal purposes, according to Black's Law Dictionary, is one for whom a trust is created. In everyday usage, a beneficiary is the designated recipient of benefits specified in a legal document, such as wills, trusts, pension plans and insurance policies. If you are named as the sole beneficiary, you are entitled to all of the benefits that pass to you in such documents.

Scope of Beneficiaries

Sole beneficiaries can be designated to receive money, land, personal property or even the proceeds from pension plans. Sole beneficiaries don't have to be individuals; religious, educational, charitable and other types of organizations can also be designated as sole beneficiaries.

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What Is the Alternative to Naming a Person as a Beneficiary?

A beneficiary is a person or legal entity nominated to inherit property after the person who owns the property has died. Documents in which beneficiaries are named typically include wills and life insurance policies, and beneficiaries usually consist of a surviving spouse, a child or another relative, although a friend may also be chosen. However, a beneficiary does not have to be a person. In fact, there is more than one alternative to naming a person as a beneficiary.

Irrevocable Trust Estate Planning

A trust is created by a trust agreement to hold property for the benefit of the trust's designated beneficiaries. A settlor, the legal term for the person who creates a trust, transfers her property into the trust's name. Unlike property in a will, property in a trust is not subject to probate, which is one reason many people prefer trusts to a will.

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When an individual wants to maintain his property without retaining legal ownership of it, he may create a trust and transfer ownership of his property into it. He then names a beneficiary to receive income generated by the property placed in the trust, such as rents generated from rental property or dividends from stock. Transferring property into a trust removes it from the estate of the trust creator, or settlor, thus keeping it from getting tied up in probate upon the settlor's death. When the beneficiary dies, the trust property must be distributed according to the terms of the trust.

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