Why Every Will Needs a Residuary Clause

What is a residuary estate?

The residuary estate is all property not specifically left to someone in a last will and testament. In other words, it is a “catch all” term for everything left over in an estate after all the specific gifts have all been made and all the debts and expenses have been paid.

What is a residuary clause?

A residuary clause determines what happens to a residuary estate. After the personal representative gives away all the specific gifts, pays all the taxes due, and pays off the remaining debts, who gets the rest of the assets? The residuary clause answers that question.

The person who receives the residuary estate is called a “residuary beneficiary.” This is because that person is a “beneficiary” of your will, just like anyone else you give assets away to in your will. And because this beneficiary receives the residuary estate, we call them the “residual beneficiary.”

An example of a residuary clause is: “I leave all of my residuary estate to my wife, Mary Smith.” In this example, Mary would receive everything left over in her late husband’s estate after everything else in the will is probated. Thus, Mary would be the residual beneficiary.

What makes the residuary clause so important?

Without a residuary clause, assets will inevitably be left out of your will. And when that happens, those assets will not be governed by the will. Instead, the assets will be distributed according to the rules of intestate succession. This can lead to people receiving unintended assets and distributions of assets that some might consider unfair. Thus, without the residuary clause, a will is incomplete and does not encompass the entirety of your estate, potentially resulting in animosity and confusion for those you leave behind.

Who should I leave my residuary estate to?

A residuary estate can be left to anyone, but most commonly it is left to a spouse. Or if the spouse is deceased, to the children of the testator. But the decision is entirely yours. I have drafted wills in which the residuary estate went to the siblings of the testator and wills where the residuary estate went to stepchildren. If you are unsure who to give your residuary estate to, talk it over with an estate planning attorney.