Budgeting Financial Planning What Is FBO in Financial Documents? By Julie Garber Updated on October 25, 2021 Reviewed by Somer G. Anderson Reviewed by Somer G. Anderson Somer G. Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas. learn about our financial review board Photo: FatCamera / Getty Images Definition FBO stands for “for the benefit of.” It can appear in many types of financial and legal documents. You will see it most often in living trust documents. But, the term "FBO" can appear on any account or asset that carries a beneficiary designation. Key Takeaways The designation “FBO” translates to “for the benefit of” and can appear in a variety of financial and legal documents.The term most often appears in living trust documents, but you may see it on any account that has a beneficiary designation.FBO designations can be used in retirement plans, electronic funds transfers, and charitable donations. Definitions and Examples of FBO The term FBO is often used when a living trust is named as the beneficiary of a life insurance policy. You might notice a designation something like this as the policy’s beneficiary designation: "Jane Smith Living Trust UAD 02/17/18 FBO Jake and Joe Smith.” Here's what this means. Jane Smith has created a living trust under an agreement dated February 17, 2018. The trust was created to own a life insurance policy and collect its eventual proceeds. The trust is for the benefit of her sons, Jake and Joe Smith. They will inherit the policy's death benefits when she dies. The FBO designation effectively establishes the living trust’s purpose. Jake and Joe are the trust's primary beneficiaries. How Do FBO Designations Work? FBO designations can also help set up the transfer of funds in other cases where there could be legal or tax issues. These cases include 401(k) rollovers, electronic funds transfers, and charitable donations. FBO Designations on Retirement Plans The Balance Let's say that Jane Smith wants to roll over her 401(k) into her IRA. She makes all the proper arrangements and receives a check from the 401(k) plan administrator for her account balance. The check will most like be made out to the IRA plan administrator with the notation, “FBO Jane Smith.” It would look something like this: "Management Trust Group, FBO Jane Smith / Account #XXXXX" The funds have been directed to the new account. They're payable to the plan administrator, but they're for the benefit of Jane. Had the check been made out directly to Jane, it would have been counted as a 401(k) distribution. Jane would incur taxes and penalties if she didn’t deposit the money directly into another retirement account within 60 days. But with the FBO designation, the transfer is made without ever going through Jane's hands. Because of this, it's not taxed. When Beneficiaries Are Minors Children can’t legally hold their own money or property. So, an FBO designation will also sometimes appear on checks or other financial instruments directing funds to them. For instance, let's say that a minor inherits $50,000 from a relative’s estate. In this case, the check might read “FBO Sally Smith,” after the name of Sally’s mother as the payee. If the parents have died, the designation would name the conservator or trustee who will be managing the child’s property and money until she reaches the age of majority. This might also be the case if the beneficiary of the funds is mentally incapacitated or otherwise unable to handle her own affairs so someone else has been appointed to do so for her. Electronic Bank Transfers An FBO designation might also appear on an electronic transfer of funds to a bank. The check might be made out to the bank, but it will immediately be transferred to the specified beneficiary’s account. Charitable Donations The FBO designation might also appear if you’re sending money to a named charity to raise money for a specific cause. For instance, it might read to “The Hospice Fund FBO Jane Smith.” Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Edward Jones. “Custom Beneficiary Designations.” Accessed July 1, 2021. Fidelity. “Fidelity Investment-Only Non-Prototype Retirement Account Conversion Application,” Pages 1, 8-9. Accessed July 1, 2021. IRS. “Rollovers of Retirement Plan and IRA Distributions.” Accessed July 1, 2021. FDIC. “Fiduciary Accounts,” Pages 122-123. Accessed July 1, 2021.