Beneficiaries and heirs: Understanding the difference

On Behalf of | Apr 24, 2021 | Estate Planning

People often use the words “heir” and “beneficiary” interchangeably, but they aren’t really the same — especially when you’re talking about estates and inheritances.

Both testators and their personal representatives should understand the difference between the two terms. It can minimize the chances of contested wills and delays in the probate process down the road if they do.

How are heirs and beneficiaries different?

Generally speaking, heirs are relatives of the deceased who would generally be in the line of succession for the deceased’s estate. Beneficiaries, by contrast, can be people, pets and organizations that a testator names in their will, trust or insurance policies — and they may or may not be related.

What is a beneficiary designation?

If you have a life insurance policy, then you’ve likely completed a beneficiary designation form at some point. It allows you to designate the specific party who you want to receive your assets upon your passing.

It’s important to know that a beneficiary designation on an insurance policy, bank account or another asset overrides beneficial designations made in a will or even in a trust. An experienced attorney can you help you navigate the best way for you to title your assets.

Guidance in the estate planning process

Estate planning doesn’t just involve you drafting a will. There are asset and medical powers of attorneys, beneficiary designation forms and other legal documents you must review or prepare as part of this process. Making certain that your beneficiary designations match up with your goals and don’t contradict your will is just one important step in the process. Working with an experienced attorney is the best way to make certain that your estate plans are solid.