An heir is the person who is legally situated to receive some or all of your assets upon your death. Who is and isn't your heir depends in part on the laws of the state you live or die in, because each state does define heirs in a slightly different way. You can also identify your own heirs via estate planning documents such as wills and trusts.
Without an estate planning document, your heirs are usually considered first to be your most immediate relatives. That usually includes your spouse, children and possibly your siblings. If you don't have any such relations, the law might expand heir designation to grandchildren, parents and other relatives, though the law by itself will never consider a close friend your heir. That means if you want to leave assets to someone who isn't related to you, then estate planning documents are required.
State laws also determine how an estate is divided between legal heirs in the absence of a will or trust. Even if a will or trust is present, legal heirs do retain some rights. If you attempt to write your son or daughter completely out of an inheritance, for example, then they typically have at least some possibly valid arguments in probate.
Often, people use the terms heirs and beneficiaries to mean the same thing, but these terms are different. You can make someone the beneficiary to an insurance policy when they are in no way considered to be your heir. As we wrote last week, you have to be careful to ensure that your beneficiary designations are in line with your estate planning and how you want your various heirs to receive your assets. Working with an estate law professional helps you ensure all these details are aligned with each other.
Source: Investopedia, "Heir," accessed Sep. 23, 2016