Beneficiary definition: one who benefits from being named in a will, insurance policy, or RRSP.
The more traditional definition of beneficiary is heir. A beneficiary, meaning someone who receives all or part of an estate, may receive money, property, or both. Beneficiaries can be people or organizations, like charities.
What is a Beneficiary? Get Specific
There are two types of beneficiaries. The first is the residual beneficiary. Residual beneficiaries receive all or part of the estate. The second type is the non-residual beneficiary. This beneficiary receives a specific gift, such as a piece of jewelry or a specific amount of money.
When making your will, it's important to be very specific about who your beneficiaries are. Use their full names and explain how this person is related to you (daughter, son, friend). This will help ensure the right people receive your assets.
Probate Beneficiary Rights
When a will goes into probate, beneficiary rights can become an issue. Here's what the beneficiary definition doesn't tell you—it can be a long journey from the day the will is read to the day you actually receive what's been willed to you, and there's not much you can do about it. In most cases, it won't take longer than a year, however.
The executor has a lot of work to do and is not legally obligated to consult with the beneficiaries. This can lead to frustration and disputes that hold up the process even more.
(Note: the term “personal representative” is the current legal term used to refer to an executor/executrix, administrator/administratix, and judicial trustee.)
There are things you can do if you are beneficiary and feel that the personal representative is not acting in a timely manner to administer the estate. For example, if you believe that the executor has not applied for probate, you can take the executor to court. This will usually get the executor moving quickly.
Beneficiaries have a few rights, and many expectations. For example, they expect that the personal representative won't use funds from the estate inappropriately. They do have the right to a full accounting of estate assets before final distribution.
Beneficiary – No Will
When no will exists, the court assumes that he or she would have wished for the estate to go to family. Family is considered spouses and adult interdependent partners and the deceased's descendants. Unborn children (already in the womb at the time of the deceased's death) are considered legal descendants.
The deceased's spouse or adult interdependent partner can be the sole beneficiary if the deceased's children are also the children of the spouse/partner. If there are children that are not the spouse/partner's children, the estate is shared between the spouse/partner and the children.
If the deceased person does not have a spouse or adult interdependent partner but does have children, the estate is divided into as many shares as there are children. The children of the deceased's predeceased children can have their parent's share of the estate.
If there is no surviving spouse/partner and no descendants, Alberta law uses a parentelic system of inheritance. First rights go to the parents of the deceased, then the deceased's brothers and sisters or their descendants. Following that, distribution would go to grandparents, their descendants, and then great grandparents and their descendants.
If there are no beneficiaries of the estate, it goes to the Alberta government under the Unclaimed Personal Property and Vested Property Act.