I recently worked with a couple that wanted to make sure that all their worldly possessions passed to the surviving spouse upon their death, and then to their children when both of them died.
Rather than listing out every specific asset they owned, I used a residuary clause to accomplish their goals. They became alarmed when they read their Wills. They were concerned that if their Wills did not specifically identify each item they owned, the item would not pass according to their wishes.
What is a Specific Gift?
It is possible to make a specific gift in a Will. A specific gift identifies a particular item and the individual, entity, or charitable organization to which it will be distributed.
For example, a testator could specify that “my Independent Executor shall distribute my Lenovo computer to my friend, John Doe.” If a Will makes a specific gift, that specific item will pass to the identified beneficiary.
What is the Residue of an Estate?
In legal terms, a “residue” of the estate is everything that is left in the estate after payment of debts, funeral expenses, executors’ fees, taxes, legal and other expenses incurred in the administration of the estate, and after any gifts of specific assets or specific sums of cash. This would include all property, real and personal.
What is a Residuary Clause?
A residuary clause is a provision in a Will that passes the residue of an estate to beneficiaries identified in the Will. It is a safety net that catches all other items that a deceased person may own at the time of their death.
For example, a testator could say: “I give all of the residue of my estate to my wife if she survives me. If my wife does not survive me, I give all of the residue of my estate to my son.”
The vast majority of a decedent’s assets often pass according to the terms of a residuary clause.
Why is a Residuary Clause Important?
A residuary clause is a very important part of a Will because it ensures that all the testator’s estate, known or unknown, will pass according to his wishes.
Wills that include only specific gifts are risky because:
- They may inadvertently leave out assets testators acquired after they signed their Will.
- The person to whom a testator makes a specific gift may predecease the testator and may have not named an alternate beneficiary
- Additionally, it is possible that certain non-probate assets may revert to the probate estate. For example, if the testator does not identify a beneficiary on an insurance policy, the proceeds of that policy will become a part of the decedent’s probate estate.
Without a residuary clause, these assets will pass according to the intestacy statutes to individuals the testator may have wanted to omit. For an example of this, read The Cost of a Do-It-Yourself Will.
This is why every Will drafted by an attorney has a residuary clause.
This article was originally published on November 10, 2014, and updated on August 9, 2021.