There are a lot of complicated legal terms. Some of the few that often get confused are “heirs” and “beneficiaries.” Both of these terms are often used when planning an estate. Both of these terms also relate to someone who may benefit from the deceased’s assets. However, it can create a lot of legal issues if these two terms are confused.
If you’re planning your estate, then it can benefit you to learn the difference between heir and beneficiary. Here’s what you should know:
What is an heir?
One of the biggest reasons people make estate plans is that it allows them to dictate how their assets are handled after their passing. Without a legal will, which is included in an estate plan, the testator would die “intestate.” This means that the state would be required to handle the settling of the estate and dispersing its assets.
Since there is no legal will, the state would disperse assets to the deceased’s legal heirs. An heir is typically a spouse, child or close relative to the recently deceased. In many cases, the next of kin would receive assets without a valid will, which is the closest relative to the testator through blood, marriage or legal bond.
What is a beneficiary?
Because many testators want to ensure their assets go to the right people who would make good use of the inheritance, testators include beneficiaries in their estate plans. A beneficiary is anyone the testator wishes to inherit from the state, such as family members, friends or colleagues. A beneficiary would have a legal claim over assets before an heir.
In other words, your heirs and your beneficiaries may or may not be the same people. Estate planning is a complicated process with many unique legal terms. When drafting your estate plan, it can benefit you to reach out for legal help.
