What is a beneficiary designation?

A beneficiary designation is a written statement that specifies who will receive certain assets upon the owner's death. This applies to various types of assets, including life insurance policies, retirement accounts, and trusts. When the asset owner names a beneficiary, that individual or entity is entitled to receive the asset directly, bypassing the probate process. This direct transfer can streamline the distribution of the owner's estate, ensuring that the designated beneficiary receives the intended benefits without delay or complications that might arise through probate proceedings.

In contrast, other options provided do not capture the essence of a beneficiary designation. A clause that prevents beneficiaries from contesting a will refers to a no-contest clause, which is different from how assets can be transferred upon an owner’s death. An agreement between two parties regarding asset distribution might imply a contract, but it does not explicitly establish who will inherit upon death in the same direct manner as a beneficiary designation. Lastly, a formal request to alter a will is a procedural action rather than a clear declaration of intended recipients of assets, which is the primary function of a beneficiary designation.