—-
Link to the written Timeline Of Events in the Powers v. Puka lawsuit.
Below is a Visual Timeline Of Events.
—-
Yes, the concept of a “future beneficiary” is a recognized legal concept, especially in the context of trusts and estates.
A future beneficiary, sometimes referred to as a “remainder beneficiary” or “contingent beneficiary,” is an individual or entity that is entitled to receive benefits or assets from a trust, will, or other legal arrangement in the future, typically after a certain event occurs or after a specified period.
For example, in the context of a trust, a grantor might establish a trust that provides income to their spouse for the spouse’s lifetime (known as a “life beneficiary” or “income beneficiary”).
Upon the spouse’s death, the remaining trust assets might then be distributed to the children or grandchildren, who would be the future beneficiaries or remainder beneficiaries.
The rights and interests of future beneficiaries can vary depending on the terms of the trust, will, or legal arrangement.
They might have vested interests (meaning their interest is fixed and cannot be defeated) or contingent interests (meaning their interest is dependent on a certain event occurring).
When referring to future beneficiary, what’s the best way to refer to it? “remainder beneficiary” or “contingent beneficiary,” or something else?
The terminology used to refer to a “future beneficiary” often depends on the context and the specific nature of the beneficiary’s interest.
Here’s a breakdown of the terms:
- Remainder Beneficiary: This term is commonly used in the context of trusts. A remainder beneficiary is someone who is entitled to receive the remaining assets of a trust after a specific event occurs, such as the death of a life income beneficiary. For example, in a life estate trust, a person might receive income for their lifetime (life income beneficiary), and upon their death, the principal or remainder of the trust goes to another person or entity (the remainder beneficiary).
- Contingent Beneficiary: This term refers to a beneficiary whose interest is dependent upon a specific event or condition. If the condition is not met or the event does not occur, the contingent beneficiary may not receive any benefit. For instance, a will might state that a certain asset will go to Person A if they graduate from college by a certain age; if not, it goes to Person B. In this case, Person B is a contingent beneficiary.
- Future Beneficiary: This is a more general term that can encompass both remainder and contingent beneficiaries. It simply refers to any beneficiary who will receive benefits or assets in the future, rather than immediately.
Which term to use depends on the specifics of the situation:
- If you’re referring to someone who will receive assets after a life income beneficiary’s interest terminates, “remainder beneficiary” is the most appropriate term.
- If you’re referring to someone who will receive assets only if a specific condition is met, “contingent beneficiary” is the best term.
- If you’re speaking generally about someone who will receive benefits in the future, without specifying the nature of their interest, “future beneficiary” works well.
When drafting or interpreting legal documents, it’s essential to use the term that most accurately reflects the nature of the beneficiary’s interest.
What’s the best term if my mom receives a benefit and then upon her death, I receive the benefit?
In the context you’ve described, where your mom receives a benefit during her lifetime and then, upon her death, you receive the benefit, the most appropriate term for you would be “remainder beneficiary.”
Your mom would typically be referred to as the “life income beneficiary” or “life beneficiary,” as she has the primary or initial interest, and you, as the person who receives the benefit after her interest terminates, would be the “remainder beneficiary.”
Why specifically is it called a remainder beneficiary?
The term “remainder beneficiary” originates from the concept of a “remainder interest” in property law. Here’s a breakdown:
- Life Estate and Remainder Interest: When property is given to someone for their lifetime (often referred to as a “life estate”), that person has the right to use and benefit from the property during their lifetime. However, they don’t have the right to decide what happens to the property after their death. The interest that takes effect after the life estate terminates is called the “remainder interest.”
- Terminology: The person holding the life estate is called the “life tenant.” The person (or entity) who will receive the property after the life estate ends is called the “remainderman” or “remainder beneficiary.”
- Why “Remainder”?: The term “remainder” is used because this beneficiary receives whatever is left (or “remains”) of the property interest after the life estate ends. Essentially, once the life tenant’s rights expire (usually upon their death), the remainder beneficiary gets full ownership or benefit of the property.
In trusts and estate planning, these concepts have been adapted to not just real property but also other assets.
When a trust is set up to provide income or benefits to one person for their lifetime and then pass the principal or remaining assets to another person, the second person is often referred to as the “remainder beneficiary” because they receive the remainder of the assets after the primary beneficiary’s interest ends.
List all of the other types of beneficiaries
Beneficiaries can be categorized in various ways based on the nature of their interest, the conditions under which they might inherit, and the type of legal instrument or arrangement in question.
Here’s a list of common types of beneficiaries:
- Primary or Direct Beneficiary: This is the main person or entity designated to receive the benefits of a will, trust, insurance policy, retirement account, or other contract.
- Contingent or Secondary Beneficiary: This beneficiary will receive the benefits if the primary beneficiary is unable or unwilling to do so, often due to death or another specific condition.
- Remainder Beneficiary: As previously discussed, this beneficiary receives the remaining assets after a life estate or other interest terminates.
- Revocable Beneficiary: The policyholder or grantor can change this type of beneficiary designation at any time without the beneficiary’s consent.
- Irrevocable Beneficiary: Once designated, this beneficiary cannot be changed without their consent.
- Residuary Beneficiary: In a will, this beneficiary receives any property or assets that are left after all specific gifts have been distributed and all debts and expenses have been paid.
- Tertiary Beneficiary: This is the third in line to receive the benefits if neither the primary nor the contingent beneficiaries can.
- Minor Beneficiary: A beneficiary who is under the age of majority. Special arrangements, like trusts or custodial accounts, may need to be made to manage assets until the minor reaches a certain age.
- Per Stirpes Beneficiaries: If a beneficiary dies before or at the same time as the grantor, their share will go to their heirs. This is a common designation in wills and trusts.
- Per Capita Beneficiaries: Assets are divided equally among the surviving beneficiaries.
- Income Beneficiary: In some trusts, one beneficiary may have the right to income from the trust (e.g., interest from investments), but not the principal.
- Charitable Beneficiary: A nonprofit organization designated to receive benefits from a will, trust, or other instrument.
- Death Beneficiary: Refers to the individual designated to receive retirement or life insurance proceeds upon the account holder’s or insured’s death.
- Lapsed Beneficiary: A beneficiary who predeceases the person leaving the assets, causing the gift or bequest to “lapse” or fail.
- Class Beneficiary: Refers to a group of beneficiaries, such as “all my grandchildren” or “all my nieces and nephews.”
- Creditor Beneficiary: In contract law, if one party (the promisor) promises another party (the promisee) to pay a debt or obligation the promisee owes to a third party (the creditor beneficiary), the third party can sue the promisor directly if the promisor fails to perform.
- Donee Beneficiary: A third party who benefits from a contract in which the promisee intends to give a gift to the third party.
- Incidental Beneficiary: A third party who might benefit from a contract between two other parties but has no rights to enforce the contract or claim its benefits.
