what is an irrevocable beneficiary 
an irrevocable beneficiary is a person or entity designated to receive the assets in a life insurance policy or a segregated fund contract what is irrevocable is the beneficiary status you can t choose on your own to change the beneficiary or the terms of the policy and you can t cancel the policy without the beneficiary s consent the beneficiary must agree to any and all changes in the rights to compensation from these entities understanding an irrevocable beneficiaryan irrevocable beneficiary has certain guaranteed rights to assets held in the policy or fund it s a more ironclad status than that of a revocable beneficiary whose right to assets can be denied or amended under certain circumstances with a life insurance policy the policyholder may designate either an irrevocable or revocable beneficiary to receive a payout in the event of the insured s death if someone is listed as an irrevocable beneficiary then denial of income from the policy after the death of the insured is not possible nor are any changes made to policy payout terms unless the beneficiary agrees to them for example a spouse who is an irrevocable beneficiary has the right to a policy payout even after a divorce the ex spouse must agree to changes in the policy before or after the death of the insured even the insured cannot change the status of an irrevocable beneficiary once they are named irrevocable beneficiaries also have to be notified if either the policy lapses or an attempt is made to cancel it in some states an irrevocable beneficiary has the right to veto any changes to an insurance policy including cancellation in other states they may only challenge items that directly affect them such as a payout advantages of an irrevocable beneficiarythe main advantage to naming an irrevocable beneficiary is that it ensures that money goes where you want it to go difficult to change during your life and virtually impossible to alter after your death it s for the bequests that you re 100 sure of and don t want to have to worry about keeping up to date children are often named irrevocable beneficiaries if a parent wanted to guarantee money to a child then the parent could designate that child as an irrevocable beneficiary thus ensuring the child will receive death benefits from the life insurance policy or segregated fund contract a parent might also make their spouse an irrevocable beneficiary to ensure that they have the means to support their offspring properly and not be dependent on someone else as a way to safeguard an inheritance making a beneficiary irrevocable can be especially important in this era of multiple marriages and blended families a stepparent can t cut off a child from a previous marriage or alter or challenge a policy after the death of the insured in case of a messy divorce naming a child rather than a spouse as the policy s irrevocable beneficiary could be preferable a beneficiary designation means that the funds in question don t have to go through probate so the recipient gets them faster irrevocable trustsbeneficiaries can protect assets in other ways a beneficiary designation overrides any sort of bequest made in a will and it doesn t have to go through probate the recipient will get funds faster this way irrevocable beneficiaries can also play a role in estate planning if you name a beneficiary on a life insurance policy and then put that policy in an irrevocable life insurance trust ilit the proceeds are then considered removed from your estate thus avoiding potential estate and gift taxes after your death 1 an appointed trustee can supervise the trust and distribute the assets which can be helpful in the case of irresponsible beneficiaries or when the beneficiary is a minor although irrevocable beneficiaries are pretty well shielded to begin with irrevocable trusts offer an additional layer of protection against legal challenges a beneficiary can t be sued by a creditor for these funds because the money is owned by the trust not the individual while the beneficiary doesn t own the money until the payout disadvantages of an irrevocable beneficiarythe primary disadvantage of having an irrevocable beneficiary is inflexibility you can t make any changes without the beneficiary s consent life has a way of surprising us so you need to be very sure that circumstances won t make you regret your choice as to irrevocable trusts an additional disadvantage is that you lose control of the assets in the trust ceding that control to a trustee if you suddenly need to access the funds due to an emergency you don t have it irrevocable beneficiaries and divorcesa policyholder can be ordered by a court to designate their ex spouse as a designated beneficiary most often this is seen in cases where there are dependent children child support or alimony involved in such a case the ex spouse can work with a divorce lawyer to persuade a court to make the policyholder designate the ex spouse as an irrevocable beneficiary to secure child support however the court can also have the policy amended if it s deemed that the payout is excessive in regard to what is needed to support the child or at a time when the children are no longer seen as dependents it s important to note however that state law ultimately decides the rights of beneficiaries to an insurance policy whether they are revocable or irrevocable beneficiaries policyholders should be clear with any beneficiary as to what the terms and conditions of a life insurance policy will be 