What roles do beneficiaries hold?

On Behalf of | Jul 23, 2021 | Estate Planning |

When you create your estate plan, some named people will have active roles while others will have more passive ones. For example, a healthcare proxy will have an active role in that they will make medical decisions on your behalf if you cannot. A beneficiary will typically have a passive role.

But that does not mean they have nothing to do. Beneficiaries are still role holders and they can still take steps to connect with others, especially trustees.

What can beneficiaries do?

Forbes goes into detail about the role that beneficiaries hold in your estate plan. First, what is a beneficiary? By definition, they are people who derives advantage from something, such as a will, trust or life insurance policy. In other words, they are the people you wish to leave things to.

Trust law includes duties for certain people listed in your estate plan, like trustees. Beneficiaries do not have such duties. However, it is still possible to optimize their relationship with the trustee and their interest in the trust itself. This allows the arrangement to succeed.

The key to successful arrangements

Successful arrangements between beneficiaries and trustees contain several of the same aspects from case to case. This can include:

  • The beneficiary understanding the purpose of the trust, as intended by the grantor
  • An understanding of the nature of their interest as a beneficiary
  • Know the grantor’s purpose for trust distribution, as stated by them
  • Know the terms of the trust

Though beneficiaries do not hold fiduciary responsibilities, taking an active role can still help ease the transfer of things after your death. You may want to pick beneficiaries capable of doing such a thing.