What is a beneficiary in a will?

A beneficiary is a person you name in your will or revocable living trust to receive property from your estate when you pass away. You can name specific beneficiaries to inherit any assets in your estate — including real estate, financial accounts, and more.

Types of beneficiaries

In your will, you can outline the order in which you want your beneficiaries to receive your assets. Here are the different types of beneficiaries you can specify:

• Primary beneficiary: This individual or organization is the first in line to receive certain assets from your estate.
• Contingent (or secondary) beneficiary: This individual or organization is the next in line to receive certain assets from your estate if your primary beneficiary can’t. This could happen if, for example, your primary beneficiary passed away before you, or declined the assets you left to them (known as “disclaiming” or “renouncing”).
• Residuary beneficiary: This beneficiary will receive any remaining assets in your estate after all specific gifts and debts have been paid. If you want, you can name more than one residuary beneficiary and choose the percentage that each should receive.

Who can be a beneficiary?

You have many options when it comes to choosing a beneficiary. They can be:

• Any person, including your spouse, domestic partner, child(ren), relatives, or friends. You don’t have to be related to someone to name them as a beneficiary in your will.
• A charity or nonprofit organization. Many people don’t know it, but you can donate part of your estate to a charity in your will. It’s a meaningful, effective way to create a lasting legacy, both for yourself and for causes that are closest to your heart.
• A trust. If you have a revocable living trust, you’ll likely want to create a pour-over will to go with it. The will’s purpose is to “catch” any property that wasn’t transferred to your trust when you were alive. Then, the property is “poured over” into your trust after you die. To do this, simply name your trust as your beneficiary in the will.

When choosing beneficiaries, keep in mind that a minor generally can’t own property until they become an adult (typically at age 18). If you have young children and want to name them as beneficiaries in your will, you may also want to name a financial guardian who will manage their inheritance until they come of age. Another option is to set up a testamentary trust, which is a trust under your will. With a testamentary trust, you can specify how and when you want a young beneficiary to receive certain assets. It can be complex to set up a trust for a beneficiary in your will, so you may consider working with an estate attorney.

If you’re married, all states have laws that are designed to guarantee your spouse a certain percentage of your estate. If you want to give a large part of your estate to someone other than your spouse, you may want to meet with an estate attorney to make sure your estate plan follows state law.

What property can you give to a beneficiary in your will?

In your will, you can name a beneficiary for any property that’s part of your probate estate. This includes:

• Real estate property, like your home and other real estate you own (for example, a vacation property)
• Financial assets, like cash, stocks, bonds, and individually owned bank accounts
• Personal property, like your vehicle, jewelry, artwork, furniture, and clothing
• Pets (they often feel like members of the family, but they’re considered property under the law)
• Family heirlooms or personal items, like a china set that has been passed down through many generations

Beneficiary vs. heir: What’s the difference?

An heir, or heir-at-law, is someone who is entitled to inherit part of your estate if you died without a will, according to your state’s inheritance laws. This could include your spouse or domestic partner, children, parents, and other extended family members.

A beneficiary, on the other hand, is someone you consciously name to receive part of your estate. For example, let’s say you list a favorite charity as a beneficiary in your will. Under intestate law, this charity isn’t entitled to inherit from you. The only way it would receive assets would be if you listed it as a beneficiary in your will.

What happens if you don’t name a beneficiary in your will?

If you don’t name beneficiaries in your will, there are a couple scenarios that could play out:

• If you don’t name a beneficiary for a specific asset (for example, your vehicle), that asset will be considered part of your residuary estate. It’ll be distributed to your residuary beneficiary, assuming you named one in your will.
• If all your beneficiaries die before you — or if you don’t have a will at all — then your local probate court will distribute your assets according to state law. Generally, your spouse and children will be first in line to inherit your assets, followed by parents, siblings, and extended family members.
• If you don’t have a will and have absolutely no family, then the state will inherit your property as a last resort. This rarely happens because the law is designed to get property to your relatives, no matter how distant.

Choosing beneficiaries for assets that skip probate

There are certain accounts that are typically passed on to your beneficiaries outside of your will, without having to go through the probate process. These accounts are called non-probate assets, and can include your life insurance policies, 401(k)s or IRAs, pensions, and certain bank accounts. Naming beneficiaries for your non-probate assets is a separate process from naming beneficiaries in your will — you can learn more about that process here.

How to designate a beneficiary in your will

When making your will, consider writing out a list of every asset you own in a separate document. Then decide which individual or organization you want to receive each piece of property, and include that information in your will.

When listing your property, it helps to be specific. For example, instead of writing “my car goes to my neighbor, Bob,” write out the make, model, and color of the vehicle, and use your neighbor’s full legal name.

If you’re leaving assets to a charity, it’s a good idea to include the charity’s full name, street address, and Employer Identification Number (EIN). An EIN is a unique number issued by the IRS to certain business entities. Including a charity’s EIN makes it clear exactly which charity you’re donating to. You can usually find a charity’s EIN on their website.

If you use FreeWill to make your will, we include step-by-step instructions for naming beneficiaries for each of your assets. Our free online will-making tool also makes it simple to leave assets in your will to your favorite charities with just a few clicks.

Also interested in naming a beneficiary for your 401(k), IRA, or life insurance policy? Read our guide to naming beneficiaries for assets that skip probate.