In estate planning, a beneficiary refers to an individual, organization, or entity who is designated to receive assets, property, or benefits from a person's estate upon their death. The person who creates the estate plan (the testator or grantor) specifies in legal documents like wills, trusts, life insurance policies, retirement accounts, and other relevant documents who the beneficiaries are and how the distribution of assets should occur.

Beneficiaries can be:

Primary Beneficiaries: These are the main individuals or entities directly named to receive the assets or benefits. They inherit the property or assets according to the terms specified in the estate planning documents.

Contingent Beneficiaries: In case the primary beneficiaries are unable to inherit the assets due to predeceasing the testator or other specified circumstances, contingent beneficiaries are named as backups. They inherit the assets if the primary beneficiaries are unable to do so.

Residuary Beneficiaries: These beneficiaries receive the remainder of the estate after all specific gifts, debts, taxes, and expenses have been settled. They inherit what's left in the estate after all other distributions have been made. Beneficiaries can include family members, friends, charitable organizations, institutions, and other parties chosen by the individual creating the estate plan.

It's important to keep estate planning documents up to date and to clearly outline how assets should be distributed to ensure that the intended beneficiaries receive the intended inheritance. Consulting with legal and financial professionals is recommended to ensure that the estate plan aligns with legal requirements and the individual's wishes.

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