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Legal Terms Simplified: Understanding the Most Common Words Used in Estate Planning

If you’ve ever watched a movie or read a book about wealthy families, you might’ve heard terms like “heir”, “descendant”, or “next of kin.” It might seem like these words can be used interchangeably, but actually, each one carries heavy legal implications. Using the wrong word in your estate planning documents could lead the courts to wrongly interpret your will, trust, or other document and lead to a result you didn’t want.

We’ve outlined a few commonly confused terms and their meanings so you can feel better prepared when you meet with your attorney or review your own documents.

“Heir”

An “heir” is the person entitled to receive a decedent's property under a state’s default laws when the decedent dies without a will.

You don’t get to name your heirs before you die. There’s also no investigation into who you liked the most, or spent the most time with. The list of people who will inherit property is based on their state’s default plan. As you can imagine, this varies state by state. Most state laws recognize spouses, children, and grandchildren as heirs. Some states allow other relatives, such as siblings, nieces, and nephews to be heirs, but again, these definitions vary depending on the state.

However, even if you’ve signed a will, heirs are still critical to the process. They don’t have rights under the will, but they have certain rights under the law. For example: they have the right to be notified if a will is going to be probated, because heirs are considered interested parties in the judicial probate process. Heirs also have the right to challenge the validity of a will. While there’s ways to discourage them from doing so, the right still exists.

As you can see, no matter what the process looks like after someone dies, it’s critical to understand who your state considers to be your heirs.

“Descendent”

A descendent is a person who is part of a direct family line, either by blood or adoption. Descendents are children, grandchildren, great-grandchildren, and so on. This term might be used interchangeably with “issue.”

As discussed above, children and grandchildren are heirs, so a descendant can be an heir and receive money and property according to the state’s default laws. It’s possible to disinherit a descendant, but it’s certainly not easy, and their intent must be well-documented.

“Beneficiary”

Although “beneficiary” is often used interchangeably with “heir,” its meaning is quite different.

A beneficiary is that trusted person that you’ve named in your estate plan to receive your money or property, whether that’s through your will, trust, retirement account, etc. You can select anyone to be your beneficiary, but you must have a valid legal document in place to communicate your wish.

It’s common for people to want to name their pets as beneficiaries to make sure they’re cared for when their owner passes away. Unfortunately, the law currently doesn’t allow someone to name their pet as a beneficiary. However, many states will let you create a trust to benefit your pet, with the trust named as the beneficiary of an account or property.

Naming a minor child as a beneficiary is also allowed, but requires careful thought. Anyone who wants to do this should keep in mind that when they pass away, money released to the minor will actually be in the hands of their guardian until they reach 18 or 21 (depending on the state). Only then will they gain immediate access to the inheritance. This might go against your wishes as you may not get to choose the guardian, and the child will have unlimited access to the money and property at a relatively young age.

“Next of Kin”

A person’s next of kin is their closest living blood relative. Several states include spouses in this term.

The next of kin’s role is critical, especially when it comes to end-of-life medical decisions for people who cannot make those decisions for themselves. In a circumstance like this, with the absence of a healthcare power of attorney, the next of kin will be contacted and asked to make certain decisions. While the next of kin’s power may be limited, it isn’t out of the norm for them to be considered if legal action regarding someone becomes necessary.

Why is it important to know this information?

If you’re taking the time to create an estate plan, then you obviously want to make sure your wishes are honored. Knowing these terms and their legal context will come in handy when considering who will receive your money or property, or make important decisions on your behalf.

Keep in mind that while easily accessible and cheap, many do-it-yourself estate and trust documents don’t accurately define and distinguish between these different groups of people. This might result in you believing that you’re protecting someone when you are not.

If you don’t currently have an estate plan, or you’re not sure if your current plan will accurately express your wishes, schedule a virtual meeting with a member of our team by calling (925) 831-4840. We’ll help you review and update your plan to make sure it works the way you need it to.
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