Plain-English definitions for the terms you'll encounter on your financial journey.
A person or entity designated to receive assets or benefits from an insurance policy, retirement account, or will upon the owner's death.
A legal instruction that specifies who will receive the funds in a retirement account when the owner passes away.
The person or entity next in line to receive retirement account funds if the primary beneficiary is unable to accept them.
Coverdell Education Savings Account — A tax-advantaged custodial account used to pay for qualified education expenses for a designated beneficiary. It can cover costs for elementary, secondary, or higher education.
The payment made to a designated beneficiary from an annuity or retirement plan when the original owner passes away.
A formal refusal by a beneficiary to accept an inheritance or gift, allowing it to pass to the next person in line.
A life insurance clause that doubles the standard payout to the beneficiary if the insured person dies as a result of an accident.
A federal tax on assets passed to a beneficiary who is at least 37.5 years younger than the donor, such as a grandchild.
A method of distribution where each living beneficiary receives an equal share.
A method of distributing assets where a deceased beneficiary's share goes to their descendants.
Payable on Death is a simple designation you add to a bank account that names a beneficiary to get the money automatically when you pass away. It lets your loved ones bypass a long legal court process so they can access the funds quickly.
The first person or organization named to inherit the funds in a retirement account upon the owner's death.
A provision in a trust that prevents a beneficiary from selling their interest and protects it from their creditors.
A trust that limits a beneficiary's access to funds to protect assets from creditors.
Transfer on Death is a simple way to name a beneficiary for your bank or investment accounts, so that when you pass away, the money goes directly to that person without needing to go through a complicated court process.
A bank account with a designated beneficiary that automatically transfers the funds to that person when the account owner dies.