Who Can Be a Beneficiary?

Note: The following article is part of our Complimentary Articles Series, designed to provide additional insights and detailed information on specific topics within estate planning.

Alongside this article, we suggest exploring our pillar articles for a comprehensive understanding of general estate planning issues.

• Why is it Important to Write a Will?
• How Often Should I Update My Estate Plan?
• When Should I Consider an Estate Plan?
• What Are the Benefits of an Estate Plan?
• What Are the Rules of Intestacy?
• What Happens If I Die Without a Will?
• What is Partial Intestacy?

INTRODUCTION

For some people, choosing their Beneficiary may be an easy decision. For others, however, it might be a little more challenging.

Do you give your entire Estate to your spouse? What about the children? Or a charity? Relatives? Friends? In reality, there is a great degree of flexibility in who you choose.

While other related articles deal with how you should allocate your Estate among Beneficiaries, this article explains who can be a Beneficiary to help you make an educated decision.

For context, we recommend our other articles in relation to estate planning.

WHO CAN BE A BENEFICIARY?

• Legal Capacity: Generally, Beneficiaries can be anyone who can legally own property. This covers people of sound mind, businesses, and nonprofit institutions.

• Individual Beneficiaries: Beneficiaries are typically friends, family, or loved ones. You're generally free to allocate distinct assets or sums to be distributed to each Beneficiary in your Will.

• Minors: You can also designate minors, although there are some restrictions. If you leave assets to a minor, they'll usually be managed by a Trustee until they're 18 in England and Wales. If you're considering designating minors as Beneficiaries, it's a good idea to name a Trustee who will manage the minor's assets until their 18th birthday.

• Charities: Many people name charities as Beneficiaries in their estate plans. Giving to charities enables you to support causes that are meaningful to you, and they're also tax-efficient.

• Other Legal Entities: Beneficiaries may also be trusts, companies, and other institutions.

• Unborn or Future Beneficiaries: According to English law, you may include future or unborn beneficiaries in your estate plan. You could, for instance, set aside money for anticipated future grandchildren.

• Pets: Although pets are not eligible to be Beneficiaries, you can still make plans for their care. You can achieve this by appointing a guardian or leaving funds to a trusted individual with specific instructions for the pet's care.

• Overseas Beneficiaries: There are no limitations on designating foreign persons or entities as Beneficiaries. Seeking legal advice is crucial because dealing with international beneficiaries may bring up tax and legal complications.

Caution: While the above list is comprehensive, you should factor in the possibility, however remote, of an individual or entity seeking to challenge your Will or estate plan. English law allows you to choose whoever you like as a Beneficiary.

However, specific categories of people, such as spouses and dependents, may have a legal right to make a claim against the Estate if they can demonstrate they have not been adequately provided for financially. 

Need to know more?

Good estate planning creates a solid foundation for preserving your financial legacy, providing for your loved ones in the future, and providing peace of mind for you and your loved ones.

Whether you are starting from scratch or looking to update your current arrangements, Squiggle can provide some clarity and direction, helping you to tailor a plan that suits the unique circumstances of your loved ones.

Book a callback, and we'd be happy to arrange a no-cost, no-obligation discussion with you to lay out the options available.

Alternatively, call us on 01233 659 796.

Or reach out to us here.