Can Anyone Be a Beneficiary?

There are some exemptions and limitations to keep in mind when naming your beneficiaries. Certain individuals may be disqualified from inheriting your estate in specific situations.

1. Minors
   A minor (someone under the age of 18) can’t directly receive assets, so you cannot name them as a beneficiary for most assets like real estate or money. However, you can name a minor as a beneficiary, and then specify that a guardian or trustee will manage their inheritance until they come of age. You can also set up a trust to hold the assets for the child until they reach the age you specify.

2. Disinherited Individuals
   If you specifically choose not to leave something to a family member (such as an estranged child or spouse), you can disinherit them in your will. However, in some states, spouses may be entitled to a portion of the estate, even if they are disinherited in the will. This is known as a “forced share,” and it varies depending on where you live.

3. Beneficiaries Who Are No Longer Alive
   If a beneficiary you name in your will passes away before you do, their share of the estate will typically pass to the contingent beneficiary (if one is named). If no contingent beneficiary is named, the asset may go into the residuary of your estate, which may be distributed to other beneficiaries you’ve designated.

4. Entities or Organizations Without Legal Capacity
   You cannot name an entity or organization that doesn't have legal capacity to own property, such as an informal or unregistered group. In order for an organization to inherit from your estate, it must be a legally recognized nonprofit or institution.

5. Creditor Claims
   While you might want to leave a portion of your estate to a loved one, if you have outstanding debts or unresolved legal claims, your creditors may claim part of your estate. In this case, your creditors could take precedence over certain beneficiaries, reducing the assets they receive. However, this does not apply to life insurance policies or retirement accounts with named beneficiaries.

As you work through your end-of-life planning, it’s important to be mindful of potential legal missteps that could unintentionally undo your hard work. By staying informed and seeking the right advice, you can help protect your plans from being foiled by avoidable legal issues.

Disclaimer: We’re not legal professionals, and the content here is based on our own experiences, research, and the expert advice we've received. Our goal is to offer helpful guidance to get you started on your end-of-life planning journey. We’re here to make those conversations a bit easier, and while we aim to provide reliable information, this blog is not intended to serve as legal advice. We always recommend consulting with a qualified legal professional to finalize your plans.