Beneficiary

A beneficiary (also, in trust law, cestui que use) in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. For example, the beneficiary of a life insurance policy is the person who receives the payment of the amount of insurance after the death of the insured.

Most beneficiaries may be designed to designate where the assets will go when the owner(s) dies. However, if the primary beneficiary or beneficiaries are not alive or do not qualify under the restrictions, the assets will probably pass to the contingent beneficiaries. Other restrictions such as being married or more creative ones can be used by a benefactor to attempt to control the behavior of the beneficiaries. Some situations such as retirement accounts do not allow any restrictions beyond death of the primary beneficiaries, but trusts allow any restrictions that are not illegal or for an illegal purpose.

The concept of a "beneficiary" will also frequently figure in contracts other than insurance policies. A third-party beneficiary of a contract is a person whom the parties intend to benefit from its provisions but who is not a party to the contract. A software distributor, for example, may seek provisions protecting its customers from infringement claims. A software licensor may include in its agreements provisions that protect those who provided code to that licensor.

Beneficiary (trust)

In trust law, a beneficiary or cestui que use, a.k.a. cestui que trust, is the person or persons who are entitled to the benefit of any trust arrangement. A beneficiary will normally be a natural person, but it is perfectly possible to have a company as the beneficiary of a trust, and this often happens in sophisticated commercial transaction structures. With the exception of charitable trusts, and some specific anomalous non-charitable purpose trusts, all trusts are required to have ascertainable beneficiaries.

Generally speaking, there are no strictures as to who may be a beneficiary of a trust; a beneficiary can be a minor, or under a mental disability (in fact many trusts are created specifically for persons with those legal disadvantages). It is also possible to have trusts for unborn children, although the trusts must vest within the applicable perpetuity period.

Categorization

There are various ways in which beneficiaries of trusts can be categorised, depending upon the nature and need of the categorisation.