A beneficiary refers to an individual or entity who has been chosen to receive the benefits of property, assets, or funds that are owned by someone else. Legal documents are used to specify who the beneficiary or beneficiaries should be for the specific property.

When it comes to retirement accounts like 401(k)s and IRAs, the account holder must designate a beneficiary or beneficiaries. This is crucial so the account is transferred to the designated beneficiary without going through a probate process when the account holder passes away.