The Difference Between an Heir and a Beneficiary

by | Dec 5, 2019

By: Barry E. Haimo, Esq.

December 5, 2019

The Difference Between an Heir and a Beneficiary

Not understanding the difference between your heirs and beneficiaries could change the way you plan your estate, and later cause unnecessary confusion and complications among your surviving family members and friends. 

During the planning stages, questions like this often surface: “Won’t my children end up with everything anyway?” or “Will my daughter-in-law ultimately inherit the assets in my will or trust?”

So, in this post, we want to explain the difference between an heir and a beneficiary, and how this could impact your estate.

Defining the Inheritors of Your Estate

Although the terms “heir” and “beneficiary” are often considered interchangeable, they actually each have very specific legal definitions. 

Who Are My Heirs?

According to Florida law, your heirs are your surviving spouse and blood relatives, and they are entitled to your money and property after you pass away based on the default rules of intestate succession.

Usually, the term “heir” is used when discussing the estate of a person who has died without a will. In these cases, the estate’s administrator must research who is to rightfully inherit the decedent’s property.

What Is a Beneficiary?

A beneficiary, on the other hand, is a person or entity specifically named in a will or trust. A beneficiary can be anyone or any entity – a relative, a close friend, a charitable organization close to your heart. It can even be a pet! 

Why All the Confusion, Then?

So, here’s the point at which things can become confusing. Your named beneficiaries can also be your natural heirs. But not all natural heirs necessarily become beneficiaries of your estate. 

When you decide who the recipients of your estate’s assets will be, your properly documented wishes may supersede the order of succession outlined by Florida’s intestate law.

Let us explain…

Who Has Greater Right to Your Estate: Heirs or Beneficiaries?

The easiest way to remember this is that your legally expressed wishes always take precedence regarding who will receive your remaining assets after probate. 

Beneficiaries First, Then Heirs

So, when you create official estate planning documents such as a will or trust, those beneficiaries you have named have a right to the assets you wish them to have. 

When you do not execute a will, your assets are simply devised to the beneficiaries according to the statutory predetermined order.

Spousal Rights Are the Exception

This is true except where spouses are concerned. Regardless of whether you have included your current spouse in your estate plans, by Florida law, certain circumstances entitle them to a portion of your estate.

For instance, if you update your will to disinherit an estranged spouse (still lawfully married), but remain married, he or she may still be entitled to 30 percent of your estate. This is called “elective share”.

Likewise, if you had plans for the house you lived in, know that a surviving spouse is also often granted the right to stay in residence of a property that served as your marital home.

How Discerning These Terms Impacts Your Estate

Knowing the difference between your heirs and beneficiaries, and understanding the rights they have to your estate will help you determine your most effective strategy in having your posthumous wishes met.

A particularly important fact is that being your blood relative does not automatically guarantee that your loved one will benefit from your estate.

This is why is it imperative to consult with an experienced estate planning firm like Haimo Law when developing your will or trusts. Get in touch for the guidance you need on defining your heirs and beneficiaries in order to best protect your loved ones’ inheritance against time-consuming and costly contests and disputes.

Author:

Barry E. Haimo, Esq.

Haimo Law

Strategic Planning With Purpose®

Email: barry@haimolaw.com

LinkedIn: http://www.linkedin.com/in/bhaimo

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