Understanding laws and cases related to beneficiary rights are complex, as there are innumerable terms and conditions to govern them. For every field there are separate clauses and standards, for laws associated to beneficiary rights. Some basic information and awareness is still crucial to help us understand various aspects of beneficiary rights.
Who is a Beneficiary?
He is a person you have named 'beneficiary' in your policies, like, life insurance schemes, trusts etc. This person will get all the money in case of an unfortunate incident like death. By naming a person as beneficiary, you ensure that your hard-earned money doesn't go to probate court, instead it goes to the one you nominate as beneficiary.
Many people have false assumptions that in cases of will, beneficiaries of life insurance or similar policies are also considered, which is wrong and stemming from lack of awareness about basic rules. For a detailed, descriptive and complete analysis of these rights, one must discuss all laws with the insurance company agents, who take care of your policies.
Beneficiary Rights in a Trust
People who are trust beneficiaries have the right to receive money and other assets in some form in case the trust settles. Generally, a trust settles through various means when taxes, debts and other obligations are paid and the main part, that is the assets are distributed among various beneficiaries as per the wish of granter.
The assets are only distributed after granter's death or unless he wishes so. People who are trust beneficiaries are informed about the distribution of assets by successor of trustee, who is responsible for carrying out instructions of the trustee.
In case, minor children are beneficiaries of a trust, they will require a guardian who is in charge of their financial accounts. If there are no guardians/parents, the court will assign a guardian to look into personal matters of the minor. In irrevocable trust beneficiary rights, a decision once taken and signed, can't be changed.
Life Insurance Beneficiary Rights
In life insurance policies, the "owner" has to choose a beneficiary who gets the death proceeds, in case of death of the policy owner. Generally, you can choose anyone by your own will.
In the life insurance policies, you have to highlight beneficiaries in decreasing order of preference. That is firstly, you have to choose a primary beneficiary who will be the first person to receive the money after your death.
Secondly, you have to name a contingent beneficiary who will receive the money, in case your chosen primary beneficiary dies before you. It is the right of a policy holder to change the temporary or revocable beneficiary at any time during his living. So you can change your beneficiary at any time you wish.
In cases of irrevocable beneficiary rights, also called permanent beneficiary rights, you are not allowed to carry out any ownership rights, surrender the policy or make any transactions without written consent of your irrevocable beneficiary.
Since these rights extend to innumerable fields and various laws, it is always advised to meet lawyers and agents of insurance companies to understand the laws in depth, that will help you to have better awareness about your rights.