What’s the difference between heirs and beneficiaries?

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What’s the difference between heirs and beneficiaries?

On Behalf of | Oct 21, 2021 | Estate Planning

You often see people use the words “heir” and “beneficiary” interchangeably. They’ll say things like “I need to list my beneficiaries in my will to ensure that my heirs get the right assets.” The idea is that the two terms are just different words for the same thing.

But is this true? Or are there distinctions that need to be made?

These words are not interchangeable

There’s a key difference to note. A beneficiary is someone that you wrote into your estate plan, specifically deciding to leave them an asset. An heir is a direct relative who probably expects to receive an inheritance, even if they haven’t seen your estate plan.

For instance, if you have a child, that person is your heir. They would expect to get an inheritance from you. If you want, you can put them in your will and make them a beneficiary. You can also choose not to include them in your estate plan. If you do that, it’s typically best to let them know this and explain your reasoning. This can help avoid conflict and litigation after you’re gone.

A close family friend, meanwhile, is not an heir and should not expect to get anything. If you want to leave something to them, though, you can list that person as a beneficiary in your estate plan. You give them the ability to receive your assets when you pass away. You can also choose to leave assets to an entity such as a charitable organization.

As you can see, it is important to understand the intricacies of even the most common terms when making your estate plan. Take the time to carefully consider all of your options and the steps you need to be sure that your intentions are clearly codified.

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