Future Business Leaders of America (FBLA) Business Law Practice Exam

Who is considered a beneficiary?

1. One who receives benefits under a contract

2. A person responsible for managing an estate

3. The donor of a trust or estate

4. An individual who pays for a service

The correct answer is: One who receives benefits under a contract

A beneficiary is defined as one who receives benefits or advantages under a contract, trust, will, or other financial agreements. In most cases, beneficiaries are entitled to receive certain assets, rights, or benefits as stipulated in the legal documents that create their rights. For instance, in the context of a life insurance policy, the person designated to receive the benefits upon the death of the insured individual is the beneficiary. This dynamic establishes a clear relationship between the beneficiary and the entity providing the benefits—typically a trust, estate, or contractual agreement. Given this definition, identifying someone who receives benefits as a beneficiary aligns with both legal principles and terminology used in contract and estate law. The other options refer to different roles within legal and financial contexts but do not fit the definition of a beneficiary. Those responsible for managing an estate may serve as executors or administrators, while the donor of a trust or estate typically refers to the individual who creates the trust, not those who benefit from it. Lastly, an individual who pays for a service is simply a consumer or client, not a beneficiary, as they are usually the party incurring a cost rather than receiving a benefit from a contractual agreement.