Beneficiaries have various rights based on what type of account for which they are named. For example, the rights of a beneficiary of a trust will have different rights of a beneficiary for life insurance. Here, we’ll explain the different types of rights a recipient has for different accounts and inheritance. Knowing your beneficiary’s rights could help you choose the most fitting recipient.
Trust Beneficiary Rights
Beneficiary rights for a trust can extend much further than those of any other account. One of the most common types is a beneficiary of an irrevocable trust. The term “irrevocable” means that the beneficiary and the trust must remain the same unless petitioned by the court.
Like most beneficiaries, a person who stands to inherit a trust has the right to receive distributions from the trust. These individuals also have the right to information about the trust and its administration, so they fully know their rights. Included in the access to information about the trust, beneficiaries have the right to an accounting, which is a detailed report of all income, expenses, and distributions from the trust.
Unlike some other beneficiaries, those named as primary or contingent can remove the trustee through a petition to the courts. If they believe the trustee isn’t acting in their best interest, a beneficiary has the right to remove them from the trust entirely. Finally, trust beneficiaries also have the right to end the trust.
Will Beneficiary Rights
Beneficiaries in most other areas have limited rights, including will beneficiaries. Those named in wills have the right to information. They have the right to know if their name is in a will, along with the full inheritance assigned to him or her. The executor, if asked, is obligated to inform the beneficiary of their inheritance.
These individuals also have the right to receive their inheritance within a year of their loved one passing. This is the obligation of the executor. However, wills are often trumped by other beneficiaries (such as a recipient of a trust or life insurance). Someone named in a will may not receive any money if there are beneficiaries named elsewhere for other accounts
Life Insurance Beneficiary Rights
The rights of someone who is named as a beneficiary for life insurance are also much more limited than a trust beneficiary. The first of the rights is to obtain copies of death certificates of their loved one. One of the main benefits of being named as a life insurance beneficiary is the fact that they can choose how they are paid.
There are a number of ways a life insurance beneficiary can receive the policy holdings including a lump sum, life income, joint and last survivor payments, and interest income. Each of these payments has different pros and cons, so it’s up to the life insurance beneficiary to decide which is best for them.
Finally, the life insurance beneficiary has the right to use the funds how they please. It’s their right to sell any property or assets to pay off loans, mortgages, etc., unless otherwise specified in the contract. The beneficiary also has the right to remove his or her property from the deceased’s property before selling the assets.