Heir, Beneficiary, Legatee and Devisee: Estate Law Basic Terms

When it comes to wills, trusts and estates, you will find a new vocabulary of words with their own unique meanings within this area of the law. Although you may hear people use the terms “heir,” “beneficiary,” “legatee,” and “devisee” interchangeably, each has its own distinct meaning within the context of estate law. Although the differences in the meaning of these words may seem like mere semantics, having a grasp of these fundamental basics can make creating, managing and administering the estate of yourself or a loved one far easier.

Before we go further, two terms that will aid in understanding the differences between an heir, beneficiary, legatee and devisee are as follows:

• Real property: Real estate, i.e. land and the structures attached to it.
• Personal property: All other property belonging to a person’s estate. Real property can be tangible (capable of being touched), such as a car or family heirloom, or intangible, such as stocks, bonds and retirement accounts.

You have probably heard this word in everyday life and have a general understanding of what it means. An heir is a person who is entitled to inherit from a deceased estate because they are related. Heirs are a person’s blood relatives, their surviving spouse (if applicable), and any adopted children. Parents, siblings, grandparents, nieces and nephews, aunts and uncles, and cousins are also heirs.

In estate law, heirs are discussed when a person dies without a will in place. If the deceased made a valid will, the relatives receiving property from the will are referred to as legatees or devisees (see last section below). If the deceased did not create a will, their estate will be divided up according to the state’s intestacy laws, which governs the default distribution of estate property for a deceased person without a will.

State intestacy laws decide the order in which a deceased’s heirs will inherit, and the size of the distribution each rank of heir’s receives. Intestacy laws vary by state, but the surviving spouse and children usually inherit first. For example, in North Carolina, if the person without a will leaves behind a surviving spouse and one child, the spouse and child inherit the deceased’s estate to the exclusion of other relatives. If there is no surviving spouse or child, the estate passes to the person’s parents, then their siblings, and so on down the line.

Intestacy laws are the reason that having an estate plan, or at least a will, can be so important. The default allocation provided by intestacy laws frequently stands in contrast to how individuals really want their property distributed. Without a will, the intestacy defaults apply.

Meanwhile, legatees and devisees inherit property based on a person’s will. Technically, a devisee inherits real property, while a legatee inherits personal property. Despite this technicality, “legatee” is often used in North Carolina to describe a person who takes any sort of property pursuant to a will.

A legatee or devisee can be a person, a business, a charitable organization, or some other type of agency. A legatee or devisee can even consist of a trust account the deceased designates in their will, because the money will be transferred to the trust, and then to the beneficiaries of the trust.

Likewise, beneficiary is used to refer to a person who is given an interest in the decedent’s will or trust because they are named. Trusts can take many different forms, from a life insurance trust to an education trust or pet trust. A trust is a way to allocate money to loved ones at set intervals and can help the people inheriting under the trust minimize estate or inheritance taxes, or even avoid them altogether. There is usually some triggering event that must happen in order for a trust to dispense; for example, the beneficiaries must turn 18 (as is the case with many education trusts), or the creator of the trust must die (as with a life insurance trust). The person who has a power to appoint a trustee over a trust can also be referred to as a beneficiary.

Although these distinctions of these terms may seem superfluous, knowing the vocabulary of the estate law in your state can make the process much easier during what is likely already a very stressful and trying time. If you or a loved one is facing an estate law issue, please contact Arnold & Smith, PLLC for a consultation with one of our estate law attorneys at our Charlotte, Mooresville, or Monroe Offices.