Filed Under (Wills and Estates) on 03-29-2012
Once you have figured out what items in your estate you have to leave to someone, the next step is to decide to who gets what. This is really the fun part of making a will–giving gifts to the people and organizations that mean the most to you. Whoever or whatever receives a gift from you is your beneficiary.
What is the difference between an heir and a beneficiary?
Heirs are the people who are entitled to part of your estate if you die without a will; usually your spouse, kids, and parents. Beneficiaries include everyone who will benefit from your will, including your spouse, kids, etc. If you’re reading this blog you understand the importance of writing a will—which means you should not be dying without one. Therefore, we will continue to use the word beneficiaries.
There are four types of beneficiaries
• Beneficiaries of Specific or General Gifts. These are the folks you choose to receive a particular gift.
• Alternate Beneficiaries. These beneficiaries are the ones who will receive a gift if your first (or second) choice dies before you do.
• Residuary Beneficiary. This is often the most important type of beneficiary. This beneficiary will get whatever is left of you estate—the residue—after your gifts have been made and any debts and costs have been paid.
• Alternate Residuary Beneficiary. This is your back-up residuary beneficiary in case your first choice predeceases you. You can choose more than one alternate residuary beneficiary.
It is important to remember that these beneficiaries can be institutions or charities as well as people. For example, your spouse could be your residuary beneficiary and your alma mater or church could be your alternate residuary beneficiary. If you leave a gift to a charity or other organization, you should include the charity’s legal name and address in your will. It is a good idea to call the organization to find out how they want to be named in your will.
For more information about writing your will, get “Planning a Will in Colorado”, Bradford Publishing’s Legal Series