Working The Puzzle From All The Angles

  1. Home
  2.  • 
  3. Estate Planning
  4.  • Beneficiaries? Heirs? Aren’t they the same thing?

Beneficiaries? Heirs? Aren’t they the same thing?

On Behalf of | Jun 7, 2020 | Estate Planning

Not exactly. The difference between a beneficiary and an heir is something that confuses a lot of people, so if you don’t know the difference, you’re definitely not alone. Your heirs are anyone who could potentially receive an inheritance from you after your death. If you die intestate, or without a will, the state will decide your heirs based on the laws of succession and distribute your assets accordingly.

Your beneficiaries, however, are a bit different. You may have a number of different assets that have a designated beneficiary. This is the person who will automatically receive those assets upon your death. For example, you may have a life insurance policy. If so, you would have designated a beneficiary to receive those funds after your death. Similarly, it’s common to have a beneficiary on things like bank accounts, investments and retirement plans.

It’s entirely possible for someone to be both your beneficiary and your heir. For example, if you named your adult child as your beneficiary on your insurance and also named them as your heir in your will, they would receive both the insurance money — which bypasses both your estate and probate — and any other assets that you may have so designated. That may or may not suit your plans, as it can result in situations where an heir receives more than you originally intended.

People often mistakenly believe that their will can override a designation of beneficiary, but that’s not how it works. If you’re unsure if your estate plans have been properly sorted out, an experienced attorney can help you take a look and make any necessary updates so that your final wishes will be followed.