Some people believe that the words Beneficiary and Heir mean the same thing
and that they are interchangeable, but there are very distinct differences
between these two terms.
A Beneficiary refers to those who you specifically name in your Will and/or
Trust to receive all or part of your Estate. They are identified as Beneficiaries
because they benefit from the terms of the Will and/or Trust. Gifts may
also be distributed to Beneficiaries through a Trust during your lifetime.
A Beneficiary is chosen by you. Any person or organization can be a Beneficiary.
You may choose to distribute your Estate between family members and close
friends. You may also choose to identify a charity, club, society or organization
as the recipient of a gift from your Estate. In summary, a Beneficiary
is chosen by you to receive all or part of your estate, with such choices
designated within your Will and/or Trust.
An Heir refers to someone who inherits the property of a person who dies
without a valid Will, also identified as an intestate estate. Heirs are
determined by the laws of descent. The order of succession is determined
by the laws of the state where the decedent's property is located.
In general, the Estate may go to surviving members of the decedent's
immediate family, including a spouse, children and grandchildren. If there
are no surviving members of the immediate family, the inheritance may
pass to other blood relatives including aunts, uncles, cousins, nieces
and nephews. Under this scenario, inheritance is based upon the degree
of family kinship and the applicable laws of intestacy. Heirs have no
rights to your assets as long as you are alive. Family members only become
Heirs after your death, and if you die without a valid Will or Trust in place.
Consequently, it is absolutely essential to prepare a Will and/or Trust
in order to confirm that your wishes regarding designation of Beneficiaries
and corresponding gifts are honored and respected after your death.
Scott D. Fisher has been preparing Wills and Trusts for over 25 years and
has the experience and integrity to help with all your Estate Planning
needs. Contact our office for a free consultation!