Louisiana residents who are planning their estate know that both heirs and beneficiaries stand to benefit from the assets left behind But many people are not fully aware of the differences between these two designations. Estate planners should understand this difference and how their assets will become affected.
“Dying intestate” is the term used in the estate administration process to describe a person dying without completing a will. The assets of the estate will then usually pass to the closest relatives of the decedent after death. These relatives are “heirs” to the estate. A spouse is usually first in line when someone dies intestate. Children and grandchildren are next in line. Parents become heirs to the assets of a deceased person when no spouse or children exist.
Wills, life insurance policies, trusts, and other documents list beneficiaries. This beneficiary receives property when the owner dies. An heir can become the beneficiary of a will. But testators can also name friends, charities, and even pets as beneficiaries. There are many examples of parents leaving assets in a will to a romantic partner instead of their children.
Points of interest
One interesting point is that assets left to a beneficiary of a will may not become the individual’s property. This fact is relevant because the beneficiary named in the will might differ from the listed beneficiary on a bank account or insurance policy. For example, a parent may decide to leave the money in a savings account to children. But if the beneficiary listed on the savings account is someone else, that person may be legally entitled to the account’s contents.
Estate planners should remember that beneficiary designation on individual documents will trump a will in most situations. The best way to avoid these conflicts is updating these designations anytime a new birth, adoption, marriage, divorce, or another major life event happens in a family.
A well-organized estate plan will provide everyone in the family with more peace of mind regarding financial matters. Individuals with questions regarding the estate planning process may benefit from a conversation with an attorney.