What roles do beneficiaries play?

On Behalf of | Jul 22, 2021 | Estate Planning | 0 comments

When creating your estate plan, it is crucial to understand the role that each individual plays in the whole. Some hold a more active role, such as healthcare proxies and trustees. Others, like beneficiaries, have a more passive part to play.

But this does not mean beneficiaries have no role at all. They constitute a crucial part of your estate plan and it is important that you do not overlook them.

How beneficiaries fit into your plan

Forbes examines the way beneficiaries fit into your overall estate plan. First, a beneficiary can be many things within the plan. This term simply refers to anyone who derives advantage from something, and in reference to estate plans, this often includes trusts, wills, life insurance policies and so on.

Next, trust law includes a list of duties that your trustees must fulfill, but these same laws do not apply to beneficiaries. While they have no fiduciary duties, however, they can still maintain an active role by optimizing their interest in the trust and building their relationship with the trustee.

Crucial points of understanding

Thus, a beneficiary should make it their goal to understand several crucial points about the arrangement with the trust. This can include things such as:

  • Understanding the terms of the trust itself
  • Knowing the trust’s purpose as described by the grantor
  • Knowing the investment objective
  • Understanding their interest as a beneficiary specifically

In general, understanding the ins and outs of trust administration can help beneficiaries with their own role, as well. It can help to have legal guidance at this time due to the complexities of an estate plan.