The word beneficiaries can be confusing, but it refers to institutions or people that you intend to leave property to. There are a few different types of beneficiaries including residuary beneficiaries, final beneficiaries, alternate beneficiaries, life estate beneficiaries and primary beneficiaries. Primary beneficiaries are those that you leave identified gifts of property to and usually involve a specific piece of property.
Primary beneficiaries can also be named for different items. Some people choose not to name primary beneficiaries at all, instead leaving all of their property to residuary beneficiaries. Residuary beneficiaries are those who receive property left in a trust or will that has not been specifically left to other beneficiaries.
Alternate residuary beneficiaries can also be named. Alternate beneficiaries are those individuals who can receive property items if the primary beneficiary is unable to receive it or has passed away. Life estate beneficiaries mean that an individual has certain rights to receive income from or the use of the property during their life, but never to become a full legal owner of the property.
Final beneficiaries are those who are eligible to inherit a piece of property after a life beneficiary passes away. Establishing both primary and alternate beneficiaries is recommended for each piece of individual property that you intend to pass down using a trust or a will. This is because you can avoid many confusing aspects of estate or probate planning, and can ensure that you have expressly considered each item most important for you to name.
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