Correct Legal Terms for Planning from Austin Estate Planning Attorney Liz Nielsen

Legal Terms Associated with Family by Austin estate planning lawyer Liz Nielsen

While watching a movie or reading a book about wealthy individuals and their families, you may have come across terms such as “heir,” “descendant,” and “next of kin.” Though made-for-Hollywood storylines use these terms interchangeably, words describing familial relationships have distinct definitions. Using the correct terms is critical in wills, trusts, and other legal documents because words have significant implications. The wrong word can lead the courts to incorrectly interpret your documents and therefore have unintended results. Here are a few commonly confused words, their proper meanings, and some usage scenarios.

What is an Heir?

The first term to become familiar with is “heir.” An heir is someone entitled to receive a your property under a state’s default laws if you die intestate (without a will). Heirs are not determined by your wishes. There is no investigation into whom you like or were most closely associated with. The list of people who will be deemed to be heirs and can inherit based on the state’s default plan varies depending on the state where you live. Texas law recognizes spouses and descendants (children or grandchildren), as well as other blood relatives (should you die without a spouse or descendants).  These laws will recognize parents, siblings, nieces and nephews, and even grandparents.  However, please be aware that Texas law does not recognize non-adopted step-children as your heir.

However, even if you have signed a will, the default heirs are still critical to the process. They may have no rights under the will, but they do have certain rights under the law. One such right is the right to be notified if your will is to be probated, because heirs are considered interested parties in the judicial probate process. Heirs also have the right to challenge a will’s validity. There are a few tools that one can use to discourage individuals from challenging a will, but the right to challenge the will still exists. As a result, it is critical that you understand who your state considers to be your heirs.

Who is Considered Someone’s Descendant?

A descendant is a member of your direct family line by blood or adoption.  This includes, but is not limited to, children, grandchildren, and so forth. As discussed above, children and grandchildren are heirs. So a descendant can be an heir and receive money and property by default under Texas law. Another term that is used interchangeably with “descendant” is “issue.” These two terms refer to your children or grandchildren. Meaning your issue are your descendants. If you wish to disinherit a descendant, your intention must be properly documented. Because descendants are part of your direct bloodline, the law does not allow them to easily be disinherited.

What does the Term “Beneficiary” Mean?

“Beneficiary” is often used interchangeably with “heir,” but its meaning is quite different. A beneficiary is someone who is part of your crafted estate plan. Meaning they are someone you have designated to receive money or property through written documents such as wills, trusts, retirement account and insurance policy beneficiary designation forms, and other similar documents. Anyone can be named a beneficiary (a spouse, a parent, a descendant, a friend, or a charity) in a valid will, trust, or other document.

One common question that arises during discussions about beneficiaries is whether pets can be beneficiaries to ensure that they are cared for when their owner dies. The answer is a little complex.  Currently, the law does not allow someone to name a pet as an outright beneficiary of a will, retirement account, or insurance policy. Meaning, you can’t just leave your bank account to your dog. But many states (Texas included) do allow for a trust to be created to benefit a pet, with the trust named as the beneficiary of an account or property.

Naming a minor child as a beneficiary of a will, insurance policy, or retirement account also requires careful thought. This option is typically allowed under the law, but anyone considering it should keep in mind that when you pass away, the money released to the minor will actually be in the hands of your child’s guardian until he or she reaches the age of majority (which is eighteen in Texas). At which time your child will gain immediate access to their inheritance. This outcome may not be what you want, because you may not get to choose the guardian, and your child will have unfettered access to the money and property at a relatively young age.

Who are the Next of Kin?

Another often misused term is “next of kin.” The next of kin is your closest living blood relative (children, parents, siblings). Texas law has expanded this term to also include your spouse. The role of next of kin is critical, especially when end-of-life or medical decisions need to be made. In such instances, the if you have not done any estate planning, the next of kin may legally be responsible for making end-of-life and medical decisions. The next of kin’s power may be limited, but it is not unusual for the next of kin to be one of the people considered if legal action regarding someone becomes necessary.

How Should I Use this Information?

Using this article, you can ensure that all terms are used in the right legal context.  Accurate use of these terms ensure your plans and wishes are honored. Many do-it-yourself estate and trust documents do not accurately define and distinguish the different groups. If you are not aware of the distinctions, you may believe that you are protecting someone when you are not.

Please contact our office if you need to create a plan or update a previous one. We will help you make the necessary changes to ensure that your wishes are honored and loved ones are protected.

Give Us a Call

Nielsen Law PLLC provides family focused estate planning to individuals and families in Austin, Round Rock, Cedar Park, and the Central Texas area.  For more information and to learn about our firm, please contact us.