By Ben A. Neiburger, Attorney, Generation Law
Each of these three terms: beneficiaries, heirs, and legatees are basically the same—they are people or organizations entitled to receive assets when a person dies. But each of these terms applies to different scenarios.
Beneficiary
A beneficiary is typically an individual or organization (such as a charity) named under an account or trust to receive money or income when a person dies.
With a trust, the trust document names a person to be a beneficiary and the terms of the trust dictate what a beneficiary receives from it.
Accounts, such as an IRA, retirement plan, bank account, or brokerage account can also name beneficiaries. The owner of the account fills out a form naming a person or an organization to be their beneficiary.
Upon that person’s passing, the beneficiary completes a notice of death form and then claims the benefits under that account. However, not all accounts contain beneficiaries.
Heir
An heir is a family member who will receive a person’s assets under the State law that takes effect if that person dies without a will. Traditionally, if a parent dies, the heirs are the spouse and children.
Legatee
On the other hand, a legatee refers to a person named in a will. Of course, it is possible to be both an heir and a legatee. These distinctions are important only if an estate goes through probate.
Updated 1-11-2024
Originally published 2-11-2014
