In the financial world, a beneficiary is a person or entity that receives funds, assets, property or other benefits from a trust, will, or life insurance policy.Usually, these documents name the primary beneficiary, who’s entitled to the assets at the appropriate time. In many instances, the documents name a contingent beneficiary who’s entitled to the assets if the primary beneficiary has passed away. One of the most common uses of beneficiary status is in wills, which are legal documents that dictate how a deceased person’s assets are to be divided and distributed. The person who creates the will lists the beneficiaries who are to divide her estate after she dies. A will can have certain stipulations for beneficiaries. For example, a beneficiary may have to reach a certain age before he can receive and control the assets he’s inheriting. When a will does not name beneficiaries, courts must choose how assets are split. The process is called probate, and it can be long and costly, and it can divide families, as well. Beneficiaries may also be taxed on their inheritances. For example, many life insurance policies tax the interest accrued on the principal.