What Is the Difference Between a Beneficiary and an Heir

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!

Categories: Estate Planning