Understanding how heirs and beneficiaries are defined is crucial in helping you determine who will be entitled to inherit your assets after you pass away. Even if you are not ready to begin the process of estate planning in South Carolina, understanding the differences between the two is essential to being financially literate.
Understanding heirs in estate planning
In estate planning, an heir is defined as a blood relative or spouse who is legally entitled to the inheritance by the decedent. Without a will in place, the inheritance of the decedent is inherited by the closest relatives. First in line is the spouse, then the immediate decedents and if none of those are living then onto the parents. If there are no heirs, the estate passes on to the state.
Understanding beneficiaries in estate planning
In estate planning, beneficiaries are the individuals listed in the will who have been selected to receive an inheritance from the decedent’s estate. Beneficiaries do not have to be heirs to the decedent. A beneficiary can be a long-term partner, a friend, a stepchild or anyone else who wouldn’t normally qualify as an heir. The amount of the beneficiary’s inheritance may be based on a percentage of the estate determined by the decedent’s probate directives.
Having a will in place allows the decedent to decide who will receive their inheritance and determine how the assets of the estate will be distributed. The beneficiaries named in a trust or will could even be a pet or charity. Otherwise, the estate will be subject to state’s default succession laws and passed onto the heirs-in-law or absorbed by the state.