During probate proceedings or estate administration, the focus is generally on fulfilling a person’s obligations and distributing what property remains. After paying taxes and allocating resources for creditors, personal representatives can make distributions to beneficiaries or heirs.
Many people find the terminology surrounding estate administration confusing and may assume that heirs and beneficiaries are effectively the same thing. However, there’s a key legal difference that separates a beneficiary from an heir for the purposes of estate administration.
Beneficiaries are chosen by the decedent
Legal adults typically have the right to establish estate plans. They can provide instructions regarding the distribution of property based on the relationships that they have with people and their personal values.
Beneficiaries are the people selected by a testator to inherit their property. People can name beneficiaries in wills or in trust documents. Beneficiaries can be individuals or even nonprofit organizations.
Heirs are different. The heirs of an estate are the people who have a legal right of inheritance if someone dies without a will. Spouses, children and surviving parents could potentially be the heirs of an estate without a will. Personal representatives typically have a fiduciary duty to act in the best interests of either beneficiaries or heirs, depending on the circumstances surrounding estate administration.
Estate administration may require a careful review of documents to properly identify beneficiaries or even attempts to locate distant family members if a person dies intestate without any immediate relatives. Learning more about probate proceedings, including who might inherit from an estate, can be beneficial for those hoping to inherit and those overseeing estate administration.