Look at it this way. When you are level 1 gen 1, you are a new adventurer, exploring the world, fighting the battles, getting the experience of a fighter. When you are old, got grey hair, and feel that you can reward yourself by retiring from the battlefield, you put retirement.
As you have used a weapon in huge fights, and this weapon have gotten a reputation, you heirloom it to your son/daughter who wants to start selling his/her sword to the great lords out there. As this weapon got this reputation, and you have flickered on it, it is a better gear than normal gears of that type. Thats what a heirloom is.
Your char is now the son/daughter of the char you played before retirement, _it is not the same person_. This is why you can change the name, and this is why the character evolves with different skills than his/her mom/dad.
Roleplay!