Financial Dictionary -> General Finance -> Heir

People often consider a heir something out of fantasy where somebody inherits a throne, but a heir is technically anybody that is set to inherit the estate of another, as recognized by the law and/or the predecessor's will. The term itself comes from feudal ears where the eldest son was considered the heir to the estate.

An estate is everything somebody owns, including property, land, assets, businesses, investments, cash and liabilities, and when this person passes away it will either go to the next of kin (usually offspring, wife, husband, or sibling), or the beneficiaries outlined in the will; A legal document that notes what parts of the estate go to whom.

In the United States the heir (indirectly through the assets themselves) must pay an inheritance tax on the estate of the decedent. Due to this, it is not uncommon for somebody nearing death to transfer property before they pass on, thus getting around the tax issue.

An often unconsidered and stressful aspect of being the heir is that liabilities (mainly debts) are also inherited. Not directly; they will never be in heir's name, but before inheritance is received, all debts must be paid off using the estate of the decedent. If they are massively in debt, it can have a big effect on the final inheritance.