You have “heirs” and you can have “beneficiaries.” While these two terms are often used interchangeably to mean someone who benefits from the deceased’s estate, they do not necessarily mean the same thing for legal purposes.
When planning your will, it can help to learn the difference between heirs and beneficiaries. Here’s what you should know:
What is a beneficiary?
In your will, you can name beneficiaries to benefit from your estate. Beneficiaries have legal claims over your assets after you pass away. You can name anyone as a beneficiary, such as a spouse, children, parents, clients, coworkers, friends or charities.
You can name a primary beneficiary as the first to legally claim assets from your estate. If the primary beneficiary passes away or if there are more assets, then you could have a secondary or residuary beneficiary.
Naming beneficiaries can help distribute assets in a manner of your liking. It can also prevent unnecessary fighting between relatives who feel as though they have a claim over your assets.
What is an heir?
Without a valid will, you’ll die intestate. Intestate means the state handles the distribution process of your assets. The state can not know your last wishes and who you want to benefit from your estate without a last will and testament. However, an heir is someone who is related to you and could benefit from your assets after you pass away without a valid will according to state law.
An heir is generally your next of kin or blood relatives. The next of kin can be a spouse, child, parents, siblings or extended family, typically, in that order.
It’s important that you know the differences between beneficiaries and heirs. As you plan you will, you may need to reach out for legal help.