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Heirs and beneficiaries aren’t the same

On Behalf of | Nov 27, 2023 | Estate Planning |

If you’ve started doing some research about estate planning, you’re likely to see a lot of terminology with which you’re unfamiliar or that’s somewhat confusing. Two terms that people often use interchangeably but mean two different things are “heirs” and “beneficiaries.” 

Let’s take a look at what each word means when it comes to your estate plan. It’s crucial to understand the difference.

What is an heir? 

An heir is a family member who would potentially be entitled to inherit part of a person’s estate if they die without a will (intestate). These are people related by blood, adoption or marriage. Most intestate laws (including Virginia’s) consider spouses, children and parents at the top of the list of those eligible to inherit if a person dies intestate.

One of the many advantages of having at least a will in place is that you don’t have to leave anything to most of these people unless you choose. If you do include them, you can typically designate how much (and specifically what assets) you leave them.

One exception involves surviving spouses. You can’t completely disinherit a current spouse. In Virginia, if the surviving spouse is not named in the will, they have a legal right to an “elective share” of the estate – which is a portion of the assets.

How is a beneficiary different?

A beneficiary is a person or entity named in a will or other estate plan document as the recipient of specified assets. A beneficiary, of course, may also be an heir. However, an heir, as noted, doesn’t always have to be a beneficiary. Close friends, non-profit organizations, universities and places of worship are among the most common beneficiaries. 

Note that if you’re leaving assets to an entity like a charity, it’s crucial to be specific about the identity of that organization. A lot of assets don’t get to worthy causes because those who intended to leave those assets got the name wrong or were too vague about it. It’s best to include the address, phone number and Tax ID number, if they have one.

That’s just one of the completely preventable mistakes you can easily avoid if you have experienced legal guidance in developing and maintaining your estate plan. This guidance can also help ensure that you make things as easy as possible for the loved ones you leave behind.