Estate Planning 101: What is the difference between an heir and a beneficiary?
An heir is a person entitled to distribution of an asset or property interest under applicable state law, if you pass away without a will or trust. Every state has rules about who inherits what from you if you don’t have a will or trust in place at your death. These are usually called intestacy laws.
A beneficiary is a person named in a will or trust to receive property from the maker of the will or trust.
Thus, while many people use the terms interchangeably, by definition they are different. As an added twist, however, in some cases an heir and a beneficiary can be the same person. For example, if Donna Decedent passes away without a will, unmarried but with one child, the only child would be the only heir of her estate. If Donna Decedent had a will giving her entire estate to her only child, that child would be the only beneficiary of her estate.