For many in Woodland Hills, the details regarding who is entitled to estate assets may be difficult to understand due to the unique vernacular of the law. An example of this is the confusion that exists between the titles “heir” and “beneficiary.” Many may use the words interchangeably, when in reality they have very different meanings.
If one has named his spouse, children or any other party or entity as being entitled to receive his or her assets through a will, trust, or other form of legal arrangement, he or she is naming them as beneficiaries. The common assumption is that one primarily leaves his or her beneficiaries cash gifts. However, information shared by the IRS show the most common estate portfolio assets to be stocks, small business interests, and real estate.
Yahoo! Finance reports that at least half of Americans are set to die intestate (without a will). Those to whom the law identifies as being entitled to estate assets in this scenario are referred to as heirs. Lineal heirs are a person’s issue (direct lineal descendants), while collateral heirs are those outside of his or her direct descendants (i.e., siblings, cousins). The classification of heirs refers to the manner in which they may be entitled to the interests of an estate. These include:
- Heir of the body: One entitled to assets based upon his or her fixed order of kinship.
- Prospective heir: One entitled to assets unless specifically excluded from an estate by the decedent.
- Presumptive heir: One entitled to assets in the absence of a more closely-related heir.
Interestingly, spouses do not meet the legal definition of heirs. However, California recognizes them as being among the first to inherit the assets of those who die intestate.