Estate planning for beneficiaries and heirs

Estate planning for beneficiaries and heirs

Many Maryland residents assume that when it comes to inheritance, an heir is the same thing as a beneficiary. The two terms mean entirely different things, and which one you are will determine how an inheritance will be paid out. One of the many reasons that people are encouraged to get wills is because having them will help ensure that their wishes will be carried out properly when they pass away.

What is an heir?

An heir is the relative who gets a deceased person’s estate when there was no will in place. When a person dies without a will, they’re referred to as having died intestate. When someone dies intestate, relatives inherit the estate in prescribed shares. The closest relatives or surviving spouses are usually first in line. More distant relatives follow.

Surviving spouses are not technically heirs, but assets are usually paid out to them first based on a state’s community property or marriage laws. After surviving spouses come children, parents, descendants of grandparents, etc. If there are no heirs at all, the estate goes to the state. When the estate goes to the state, it’s called escheatment.

What is a beneficiary?

A beneficiary is someone who has been named in a will to receive someone’s assets when they pass away. The key takeaway is that a beneficiary doesn’t have to be an heir. The beneficiary is literally anyone a person wants to inherit the estate. It could be a friend, neighbor, or co-worker. The beneficiary gets exactly what the person writing the will wants them to have versus the prescribed shares that heirs get. Knowing this distinction between the heirs & beneficiaries can help people understand what they need to do to make sure their estates go to the people they want them to.

How can someone get help with setting up their estate?

People looking for information and help with setting up an estate may benefit by working with estate planning attorneys who have experience with this type of law.