People’s wills often include detailed instructions about how their assets should be distributed in the event of their death. They might leave certain assets for their spouse and others for individual children. It is common for testators to prioritize the inclusion of assets that have either significant financial value and/or emotional value for family members.
Heirlooms, personal collections, real estate and retirement accounts are some of the assets that people frequently address directly in their estate plans. Many wills also include residuary clauses that deal with less valuable property.
Why are residuary clauses often important to someone’s estate planning efforts?
Most people cannot list all of their assets by name
The average adult probably has thousands of pieces of personal property scattered throughout their house. From their clothing and cosmetics to their cookware and furniture, all of those assets will typically become part of their estate.
With the exception of property already gifted to others or slated to transfer directly at the time of someone’s death, every belonging someone has will be part of their estate and therefore requires their consideration when planning their legacy.
A residuary clause is an effective tool for addressing all of someone’s remaining property after they have discussed their most important belongings. A residuary clause effectively gathers up the remaining property in someone’s estate and designates beneficiaries for those assets. Other times, the residuary clause might include instructions for the executor to hold an estate sale and liquidate the property not designated for specific beneficiaries or claimed by family members after someone’s death.
Why such clauses are so valuable
Someone’s personal property could be worth tens of thousands of dollars, possibly even more. It is common for people to fight bitterly over assets that have perceived financial value during estate administration. It can also be very stressful for an executor to have to make decisions on the fly about assets that may be a source of contention among beneficiaries.
By taking initiative and employing clear instructions for the distribution of otherwise unnamed property, testators can reduce the stress involved in probate proceedings and lower the likelihood that their family members will end up battling over their resources in probate court.
In these – and so many other – ways, including thoughtful terms in a will and other estate planning documents is crucial for someone’s protection as they age and for the appropriate administration of their estate after they die.