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beneficiary

 

 

Beneficiary is a person or charity named in a Will that receives some (or all) of someone’s assets upon their death. As the Will maker, you can leave all assets to one Beneficiary, or you can have multiple Beneficiaries who will inherit various assets from your Estate.

You may have also heard the term “Designated Beneficiary” in connection with a life insurance policy or a registered investment account. In the case of an insurance policy, the Designated Beneficiary named on the policy receives the insurance proceeds; in the case of a registered account, the Designated Beneficiary becomes entitled to the value of the account when the owner dies.

The same is true with Beneficiaries named in a Will, who become entitled to receive the assets in the person’s Estate in the manner prescribed in the Will.

What do Beneficiaries receive?

A beneficiary named in your Will receives … whatever you want them to, as set out in your Will.

You can decide whether your Beneficiaries receive specific assets (like personal property, real estate, or cash). As long as you’re clear in your Will, your Executor will be responsible for distributing the items or assets to the individuals or charities.

Here are some common items Beneficiaries may receive under a Will:

Personal Property

Some common gifts of personal property include:

  • Jewelry
  • Art
  • Cars
  • Family heirlooms
  • Family albums and photographs
  • Books

Real Estate

You may want to leave your house to one Beneficiary, but a cottage or summer home to another Beneficiary. Real estate also includes any land or rental buildings you own.

If someone owns a property (like their family home) jointly with someone else (such as their spouse), then that property may not form part of their Estate when they die, depending on how ownership is structured. In these cases, the property may simply become the property of the surviving owner and not be affected by the deceased’s Will.

Charitable Donations

Charities can be Beneficiaries of your Will.

Charitable donations contained in a Will, also known as planned gifts or legacy gifts, can be almost anything, including personal property, cash, investments, or a percentage of the Estate. When someone leaves a percentage of their Estate to charity, the organization may receive a share of the Estate’s investments, or the cash value equivalent based on the total value of the Estate.

Cash

You can leave cash to Beneficiaries in your Will in two ways.

Option one is to specify a dollar amount. For example, many people leave a percentage of the value of the Estate to family members and friends, and they can also leave specific dollar amounts.

Option two is to have someone receive money as part of the “residue” of your Estate. The residue of an Estate is the part of the Estate that is left over after all gifts that have been specifically identified in the Will (e.g. gifts of personal property and dollar-value cash gifts) have been accounted for. A Beneficiary of the residue of an Estate (which usually represents the bulk of the Estate) is generally assigned a “share” or “portion” of the residue to which they are entitled.

Who qualifies as a Beneficiary?

A Beneficiary can be any of your loved ones or any charitable organization that you specify in your Will. The person you choose to be your Executor may also be a Beneficiary.

Common beneficiaries are:

  • Spouse
  • Common-law partner
  • Children and/or stepchildren
  • Parents
  • Friends and acquaintances
  • Other family members
  • Charitable organizations

A Note of Importance: If you have a common-law partner, it’s important to have a Will if you want your partner to be a Beneficiary. In many provinces common-law partners don’t have the same property rights as married couples upon death, so dying without a Will can lead to some disastrous results.

How do I name a Beneficiary?

Naming beneficiaries is a standard part of the process of creating a Will.

When you’re naming Beneficiaries in your Will, be sure to use their proper legal names.

If you’re naming a charitable organization as a beneficiary, in addition to using the proper legal name of the organization, make sure to include the Charity Registration number issued by the Canada Revenue Agency.  It is also important to identify what needs to be done if this charity ceases to exist or is absorbed by a large institution. How would you want the funds managed?

What can my Beneficiaries expect when I die?

Depending on whether you’ve had conversations about your Will with your Beneficiaries during your lifetime, they may or may not know they stand to inherit anything from your Estate.

If your Will is submitted to the court for Probate, your Executor will be responsible for serving each of your Beneficiaries with notice of their entitlement. This is a formal process that lets these people know that they have been named as your Beneficiaries.

The Probate court will review the Will and, if satisfied that all of the requirements are met, will authorize the Executor to start administering the Estate. The Executor can then begin the process of fulfilling the wishes contained in the Will and distributing the assets. In some cases, a Will may not need to be Probated before the Executor begins dealing with and distributing assets.

Here are some things to keep in mind about the Executor of a Will when you’re a beneficiary:

  • The Executor of the Will is the gatekeeper of the deceased person’s assets—they are your first and main point of contact when you’re a Beneficiary.
  • The Executor needs to do a lot of legwork before you receive your inheritance—give them time to gather information from banks, lawyers, accountants, insurance companies, etc.
  • Depending on the nature of your inheritance, you may be entitled to see the entire Will or only the part that pertains to you.

 

 

Estate Planning Without Children

Want more information?

Are you interested in a consultation with Peter R. Welsh?
Contact me at Peter@SmartWills.ca
By telephone 416-526-3121
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This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.

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