An heir is a person who is set to inherit assets when a relative dies. Heirs are designated at the time of death, so it cannot be said that living people have heirs, which is a common misconception. Heirs are determined when someone dies intestate, meaning they died without having a will.
When a portion of an estate is passed to an heir following a relative’s death, the asset is called an inheritance. Property and assets that are inherited can be fiduciary like cash, stocks, bonds, and retirement accounts. Or, they can also be physical or personal items like real estate, automobiles, jewelry, artwork, and furniture.
Learn how heirs are determined when a person dies without a will and how they differ from beneficiaries.
Definition and Examples of Heirs
An heir is a person who is eligible to inherit assets when a relative dies. Typically, heirs are blood relatives of the deceased who inherit the decedent’s estate when they die. Spouses, children, and grandchildren can all fall under the category of heirs.
If no traditional heirs exist, then the assets can potentially be transferred to what are known as collateral heirs of the deceased, like parents, siblings, and grandparents, or next-of-kin relatives like nieces and nephews.
Direct descendants, like children, are sometimes referred to as lineal heirs in formal documentation.
An example of heirs can be seen in the succession of the British Royal family tree. The line of succession from Queen Elizabeth II and Philip, Duke of Edinburgh, passes to son Charles, Prince of Wales, and then William, Duke of Cambridge, who is the son of Charles and Diana, the deceased Princess of Wales. While in this case, the succession of the throne is regulated by parliamentary statute as well as descent, it is still a viable example for understanding how one can be an heir.
How the Designation of an Heir Works
When a person dies, all potential heirs are notified, though that doesn’t necessarily mean they are entitled to assets. If the decedent had a will, the executor of the will is in charge of distributing those assets. After all potential heirs are identified and notified, a probate court decides who will receive the designated assets.
When someone dies intestate, a probate court is usually responsible for determining who the heirs of the estate are. The exact rules behind the distribution of assets and the settlement of the estate—often referred to as intestate succession—vary by state.
To identify heirs, some states require that the probate court run a search for relatives or place an ad in the local newspaper. If it’s found that a decedent has no heirs, property and assets are transferred to the state in which they are probated.
In cases where an estate is not handled by a probate court, and property has been passed down for generations, descendants will sometimes share property, referred to as heirs property. Heirs property is said to have a clouded title, meaning it cannot be sold, mortgaged, or even renovated until there is a clear title, or sole individual tied to the property.
Inheritances are subject to tax in many states, and rates vary depending on the inheritor’s relationship to the deceased. For example, in Pennsylvania, the tax rate is 4.5% for direct descendants, 12% for siblings, and 15% for other heirs. Some states, on the other hand, do not impose estate or inheritance taxes.
When someone dies intestate, heirs can apply to execute the estate, or distribute the assets to the rightful individuals. In New Jersey, for example, potential administrators take priority depending on their relationship to the deceased, in the order of: spouse or domestic partner, adult children, guardian of minor, decedent’s parents, siblings, grandparents, aunts and uncles, and lastly, stepchildren.
Heirs vs. Beneficiaries
While heirs are blood relatives of a decedent who may or may not legally inherit property, beneficiaries are identified as recipients of an estate in a document such as a will or trust once the estate owner dies. Beneficiaries can be individuals, or even entities such as charities.
All heirs are not necessarily beneficiaries, as seen in the case of an adult child being purposely left out of a will, though all potential heirs are usually identified and notified when a descendant dies.
A person can designate a close friend as a beneficiary in their will or trust, though this person would not be considered an heir since there is no direct blood relation.
As mentioned, a probate court determines who can legally inherit assets and property. Many states prioritize an exception for spousal rights, meaning that a surviving spouse who is not listed on the will can inherit up to a certain percentage of the estate.
Types of Heirs
Heirs are any individuals entitled under the statutes of intestate succession to the property and assets of a decedent. Aside from the surviving spouse, there are many other individuals who can be the determined heir of an estate. Below, find the most commonly used terms to describe the type of heir one can be.
- Direct or lineal heir: A person who is the direct line of decedent, such as children, grandchildren, parents, and grandparents.
- Collateral heir: A person who is not of direct descent, but is related through a collateral line. This can include siblings, nephews, nieces, etc.
- Forced heir: A person who is under 24 years old and permanently incapable of caring for themselves due to a physical or mental disability.
Minor children can also be heirs, including adopted children, though the court will usually appoint a conservator to manage their assets until they reach the age of majority. It’s important to note that most probate courts define child heirs as biological or adopted children only. Foster children and stepchildren, for example, would not have a legal right to an estate.
- An heir is a person eligible to receive assets and property when a descendant dies.
- Heirs differ from beneficiaries, who are persons or entities named in an estate to receive property when the estate owner dies.
- A probate court determines who can legally inherit assets and property.
- If an estate is not handled by a probate court, heirs may share property (known as heirs property), meaning the property does not have a clear title to be sold.