Understanding the Differences Between Beneficiaries, Heirs, and Contingent Beneficiaries

A beneficiary is a person or organization that receives money or other benefits from a trust, will, or insurance policy.
What is the difference between a beneficiary and a heir?
A beneficiary is someone who receives a benefit, such as money or property, from a trust, will, or insurance policy. An heir, on the other hand, is someone who inherits property or other assets from a deceased person's estate. While a beneficiary may be an heir, not all heirs are beneficiaries. For example, if someone leaves their entire estate to their spouse, the spouse would be the heir of the estate but not necessarily a beneficiary of a trust or insurance policy.
What is a contingent beneficiary?
A contingent beneficiary is someone who will receive the benefits of a trust, will, or insurance policy only if the primary beneficiary dies before them. For example, if John names his children as the primary beneficiaries of his life insurance policy and his siblings as contingent beneficiaries, the siblings will only receive the benefits if one or both of John's children die before them.
What is a remainder beneficiary?
A remainder beneficiary is someone who receives the remaining assets of a trust or estate after the primary beneficiaries have received their shares. For example, if John sets up a trust with his children as the primary beneficiaries and his grandchildren as the remainder beneficiaries, the grandchildren will receive any assets that are left over after John's children have passed away or used up all of their share of the trust.
What is a beneficiary designation form?
A beneficiary designation form is a document that allows you to name the beneficiaries of your retirement accounts, life insurance policies, and other financial assets. This form is typically provided by the financial institution where you hold your assets and must be completed and returned to the institution in order to update your beneficiary designations.