Estate planning often involves earmarking assets for specific people. Estate administration involves either following state statutes or testamentary instruments while distributing the resources that belong to a recently-deceased individual.
Some people die with heirs who may inherit all of their property. Others have beneficiaries who may receive their resources during estate administration. People planning their estates, individuals tasked with estate administration and those hoping to inherit from estates may need to understand the difference between heirs and beneficiaries.
The law designates the heirs of a deceased person
Heirs are typically close family members who have the right to inherit from an estate. Factors including the decedent’s marital status and whether they had any children influence who might inherit if they do not have an estate plan. When people die intestate, meaning they do not have wills, their family members with a right to inherit become their heirs.
People choose their own beneficiaries
Heirs are usually spouses, children and other close family members. Beneficiaries can be anyone who had a meaningful relationship with the deceased individual. In fact, even charitable organizations can be beneficiaries of an estate. Any party named in an estate plan and designated as the recipient of certain assets is a beneficiary.
People who die without estate plans generally have heirs who inherit their property. People with trusts and wills have beneficiaries they selected to inherit their assets.
Learning more about the terminology used in estate planning and administration can be beneficial for anyone with an interest in an estate. Heirs and beneficiaries both have a right to inherit, but that right comes from different origins.