Thinking about the probate process? Or taking steps to avoid its hurdles, through conscientious estate planning?

If you answered “yes” to either of those questions, then you’re probably up to your neck in frustrating legalese, right?

It’s exasperating, but it’s true: Estate planning and administration are often confusing processes wrapped up in red tape and loaded with language you’ve never seen before. It even happens to the pros sometimes!

In particular, there are three simple terms that often become confusing for executors or anyone wading into the estate planning or probate processes for the first time – heir, legatee, and beneficiary.

Broadly speaking, these terms all refer to someone who is entitle to receive assets when a person dies. Sometimes, you’ll even see them used interchangeably. But, strictly speaking, these terms all have slightly different meanings in the eyes of the law, and apply to different situations that may crop up after someone passes away.

Let’s break down the distinctions a little bit:

Heir

Broadly speaking, the heir category includes all those who would inherit the property of the deceased if they pass away without a will, which is known as dying intestate.

Generally, heirs are direct blood relatives of the decedent, along with his or her spouse and any adopted children. Beyond immediate family, a person’s heirs might include his or her parents, siblings, nieces and nephews, grandparents, aunts, and uncles and cousins.

In Illinois, there are fairly strict guidelines set down determining who inherits what parts of the estate in the event that a person dies without a valid will. According to the law, the decedent’s surviving spouse and children are first in line to inherit, with half going to the spouse and half to the children.

Legatee

In Illinois, a legatee is anyone designated to receive a legacy (i.e., a gift or an asset) from a decedent’s estate in his or her will. Any one person, organization (such as a religious group or a charity), or trust named in a will can be thought of as a legatee for the purposes of probate.

As many people name their family in their will, it is quite common for legatees to also count as heirs in the eyes of the law. On the other hand, would-be heirs who are not named in the will are not legatees. Similarly, the decedent can name just about anyone as a legatee, including friends, business partners, and other individuals not connected to them by blood or adoption.

One important thing to keep in mind when it comes to heirs and legatees? In Illinois, both categories tend to qualify as interested persons when a probate estate is opened. Being an interested person grants an individual certain rights when it comes to the estate and the probate process – most notably, the ability to contest a will, in certain circumstances.

Beneficiary

Beneficiary is the broadest category of these three. The term could refer to just about anyone who is named to receive assets, money, or income when a person dies.

This includes anyone who is:

• Designated as part of a trust (e.g., a trust beneficiary)
• Named in a will
• Named as a beneficiary in other accounts, such as an insurance policy, a retirement plan, a brokerage account, certain bank accounts, or so on

Not all accounts contain beneficiary designations, and generally the owner of the account must complete paperwork to name their beneficiary, a step that many overlook.

Have any more questions about probate or the estate planning process in the Chicagoland area? Curious about what it takes to administer an estate as an executor, or how you can best safeguard your family’s future? Looking for a professional to help you clear up the jargon and rip through the red tape? Don’t hesitate to drop us a line to keep the conversation going.