A benefactor is commonly known as someone who gives money for the purpose of helping another person or cause. When used in the context of dealing with the death of a loved one, a benefactor is the person (or, in rare cases, group) who passes away.

Benefactors and beneficiaries

Benefactors typically name beneficiaries to receive benefits under their own insurance policy or other financial instrument. This especially applies to benefactors if they already had some form of insurance policy or other financial instrument in their name before their death.

A beneficiary is a person (or group) who receives some type of benefit in the form of financial compensation from a financial instrument or, in most cases, insurance policy.

In most cases, beneficiaries are other family members of the benefactor, including parents, children and spouses. Sometimes, benefactors can arrange entire organization to be their beneficiary, as long as they clear that with the organization in question. When designating multiple beneficiaries, the benefactor typically needs to designate how to divide their assets between their beneficiaries, whether equally or fairly, before their death.

Choosing the best benefactor

One of the biggest concerns of families today is knowing how family assets will be divided after the death of a supporting family member. A big part of that process involves naming a benefactor.

Most individuals name their spouse as a benefactor, especially when naming one for a final expense insurance policy. The person they name takes over their role as a benefactor. The other spouse typically executes the wishes of their spouse, and also ensures that their remaining bills (and other financial debts) are covered. Any remaining funds are used for living expenses needed by the surviving spouse.

Even if both spouses are divorced, the deceased party may name their former spouse as a benefactor. This usually happens when they still have children to raise. After covering the expenses related to their death, such as funeral services or commissioning a cremation service, the leftover money is used for covering living expenses.

Of course, this works best for ex-spouses who are still on good terms with one another. If you’re not on good terms with an ex-spouse, it’s better to name another family member as the next benefactor to prevent any legal conflicts.

At the time of your death, someone needs to execute your final wishes. That’s why it’s important to select a benefactor before that time comes, so the entire family will be covered during their difficult time.