After the death of an individual, all the assets under their ownership will be transferred to their beneficiaries. The person’s estate is divided into different categories called beneficiaries (or legatees).
There are two types of beneficiaries: direct and indirect. Direct beneficiaries include spouses and children who have been named in a will or trust document; indirect beneficiaries include other relatives like grandchildren and great-grandchildren.
In this article, we take a look at beneficiaries and heirs and discuss the different provisions related to them in the law. Stay with us to find out more.
Beneficiaries and Heirs are Different
In the world of estate planning, there are two terms that you’ll often hear: beneficiaries and heirs. And while they’re not always used interchangeably, they do have a lot in common. So, let’s take a look at the differences between these two terms and how they can affect your life!
Beneficiaries are people who will receive an inheritance when you die. They are usually named in a will and can be family members or friends. If you don’t name someone as a beneficiary, your assets will pass on to your spouse or children—and those assets will be subject to the same rules as any other asset passing through probate.
For example, if you set up a trust for your children, the trust will be considered your beneficiary since it receives money or property from your estate. Your children will become the trustees of this trust with full control over its use (unless otherwise specified in your will).
Your beneficiaries can also pay themselves out of their share of the estate at any point in time without having to go through the probate process or give notice to anyone else. However, if you leave everything to one person instead of multiple people, this person will likely be considered your heir. This person would get everything after you die regardless of whether anyone else has already claimed it.
Heirs are people who inherit money after someone dies. This means that if no one inherits something from you, it goes to the state treasury instead of being passed on to anyone else who might be interested in receiving it.
Institutions like Trusts can be Beneficiaries
An institution like a trust or company can be a beneficiary. Institutions are not the same as beneficiaries, but they’re often used to make gifts and inheritances.
Institutions are legal entities that exist outside of your estate plan, meaning you can transfer assets into an institution without worrying about how those assets will be distributed when you die.
What is Inheritance Planning?
Inheritance planning is the process of choosing how your assets will be distributed when you die. It’s important to consider these options early in life so that you can make informed decisions about how your estate should be managed after death.
There are two main types of inheritance planning: wills and trusts. A will states who gets what from whom—although it’s possible for more than one person to inherit property through a trust or other legal arrangement.
A will may also include instructions about where specific assets should go if there’s no surviving spouse (or partner). This type of disposition is known as a testamentary disposition.
When you die, who gets your money? The beneficiaries are all people or entities that you have designated to receive your assets after you pass away.
They can be spouses, family members, or friends; they can even be charities or business partners. The heirs are people who inherit the estate after the beneficiaries are gone—usually because they have a legal right to do so under state law.
We hope the instructions in this article help give you the directions you require related to heirs and beneficiaries. The minute difference between the two terms can be of interest to your relatives, attorneys, and heirs after you pass away.
You should contact the knowledgeable estate lawyers at the Bourassa Law Group as soon as possible if you want to know more about beneficiaries and heirs. Call us at (800)870-8910 for a free consultation!
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