Understanding laws and cases related to beneficiary rights are extremely complex, because there are innumerable terms and conditions that govern them. And for every field there are separate clauses and standards, when it comes to laws associated to rights of the beneficiary. Nonetheless, some basic information and awareness is still crucial in helping us to understand the various aspects of beneficiary rights.
Who is a Beneficiary?
He is a person who you have named as a 'beneficiary' in all your policies, for instance, life insurance schemes, trusts and other insurance covers. It is this person who will get all the money in case of an unfortunate incident like death. By naming a person as a beneficiary, you will ensure that your hard-earned money doesn't go to probate court, instead it should come to the person you nominate as the beneficiary of the policy.
Many people have false assumptions that in cases of will, beneficiaries of life insurance or similar policies are also considered, which is quite a wrong assumption, probably stemming from lack of awareness about basic rules. For getting a detailed, descriptive and complete analysis of these rights, one must discuss all laws with the insurance company agents, who are in charge 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.