A residuary clause establishes who will receive an asset or proceeds from the sale of an asset if the will or trust doesn’t name a beneficiary for it. It’s critical to include a residuary clause in your will and in your trust during estate planning to protect your property.
If you forget to leave a high-value asset to your child or a unique family heirloom to a sibling, it could be forgotten when you die. Instead of passing property down to your intended heirs, your family might be forced to go to court and fight over your prized possessions.
What Is a Residuary Clause?
A residuary clause is a provision in a will or trust that instructs how to transfer assets not specifically mentioned elsewhere. This is a valuable clause because you can pass on everything you own upon your death without anything going unclaimed.
It’s common to designate a beneficiary for high-value property, such as a house, retirement account, or motor vehicle. However, there might be assets you forget to mention in your will or trust. Or you could have various funds, personal items, real estate, bank accounts, and life insurance policies. Listing everything in your estate plan can be time-consuming.
Instead, you can name your residuary beneficiary in the residuary clause. The language can instruct the administrator of the estate to transfer any remaining assets not gifted to someone else to your named residuary beneficiary. It’s vital to include the person’s name in the document. There will likely be confusion if you only state you want to leave your remaining assets to your child, but you have three children.
Why Does My Will Need a Residuary Clause?
Your will should include a residuary clause because it ensures that all the assets in your estate will be distributed according to your final wishes. If you gift specific property to specific people and don’t name a residuary beneficiary, you risk various consequences, such as:
- Confusion regarding what to do with an asset left to a designated beneficiary who predeceased you with no alternate beneficiary
- Leaving out assets acquired after executing the will
- Family members going through probate to determine who should receive the remaining property
What Happens if I Don’t Have a Residuary Clause?
When you don’t name a beneficiary for certain assets you leave behind, they will pass to your heirs according to intestate succession. That means any person entitled to take ownership over your personal or real property can receive it after your death. They must petition the probate court, but the judge will likely rule in their favor if they are a spouse, child, or another eligible descendant.
For some people, this isn’t an issue. They want to protect their family’s future, and state law will allow heirs to receive what they rightfully deserve. Although state law requires going through the probate process and can be burdensome for surviving families, they should recover any property not included in the will.
However, for others, intestate succession could create challenges and turmoil within the family. If you’re planning to file for divorce but pass away before you update your will, you can’t prevent your assets from passing to your spouse.
How We Can Help
At Mullen Holland & Cooper P.A., our award-winning Gastonia estate planning attorneys have maintained a stellar reputation in NC since 1950. We hold an AV Preeminent® rating from Martindale-Hubbell and have received recognition from prestigious organizations, such as Super Lawyers. We are proud of the dependable and trusted estate planning services we offer to our clients.
If you want help including a residuary clause in your will or have questions regarding estate planning, call us today at 704-864-6751 for your initial and confidential consultation.