A few years ago, a young man came to our office asking for some legal advice. He had received a letter in the mail from an attorney informing him that his half-brother had passed away. He had not spoken to his brother in many years, and their father had already passed away, so he wasn’t sure what he needed to do to claim the money he imagined was now going to inherit.
We made some calls and discovered that this young man was indeed his brother’s closest living heir. But it was not likely that he would inherit much, if anything, from his brother’s estate. Turns out he was an heir, but not a beneficiary.
What’s the difference?
Being closely related to someone does not mean that you are guaranteed to inherit something when your relative dies. This can be difficult to understand until you remember that one of the main reasons people make estate plans is so that they can decide what happens to their assets when they die, instead of letting the government make that decision for them. If you would want to make a plan for that reason, wouldn’t your relatives want to do so as well?
That’s where the difference between being an heir and being a beneficiary starts.
An heir or heir-at-law is someone the government says is a close, blood relative or spouse of a person who has died. If the person who died did not have an estate plan, state law will determine which heirs inherit the deceased person’s property.
A beneficiary is a person or organization who receives money or property because someone specifically names them in their estate plan. A beneficiary can be a person, or an organization like a charity, or even a beloved pet.
The young man who came into our office was a close blood relative, but other people were named in his brother’s estate plan. So, he was an heir, but not a beneficiary.
What do I need to do as an heir?
If you are notified by an attorney that you are an heir,
Then, sit tight. If you aren’t specifically named as a beneficiary, you may not inherit anything at all, even you were very closely related to the person who passed away. If you aren’t getting anything, but you think you should be, you can talk with your attorney about that and consider challenging the estate plan or the work of the estate administrator.
What about if I’m a beneficiary?
If you are a beneficiary, you will be getting specific information about your inheritance from the deceased person’s attorney or estate administrator. You may want to hire your own attorney if you need assistance preparing to take ownership of significant assets, or if you plan on challenging the estate plan.