POV: You carefully devise all of your prized possessions in your will (jewelry, car, real estate), but you forget to include a residuary clause. This can lead to family disputes, longer probate processes, and unintended beneficiaries. A residuary clause can solve all of those problems! And the best part? They’re extremely simple and easy to include. A residuary clause is something you include in a will that gives someone the remainder of an estate not addressed in the will. Essentially, it ensures that all of a person’s assets are accounted for after all specific bequests (gifts) have been made. Let’s dive into everything you need to know about residuary clauses in wills.
What is a residuary clause in a will?
A residuary clause in a will makes sure that any assets you have not addressed are distributed to a beneficiary. A residuary clause essentially says any assets I own but have not addressed in this will shall be devised to a certain person. A residuary clause typically means everything left after specific bequests, debts, taxes, and expenses.
Residuary assets are much more general than specific bequests. Specific bequests state specifically what you are giving away, like a specific amount of money, jewelry, a car or a house. Residuary bequests give portions of the estate away, not specific assets.
Here’s an example of some language you might see in a will that has specific bequests and residuary clauses:
“I leave the following item(s) to the person(s) named below if I own such property at the time of my death.
- To John Smith, I give my engagement ring.
- To Mary Jones, I give my entire antique car collection.
- To my nephew, John Doe, I give $10,000.00.
Except for the specific bequests listed above, my Executor shall distribute my estate according to the following:
If my spouse survives me, I give half of my residuary estate to my spouse and the other half of my estate to my brother, John. If my spouse has predeceased me, I give my residuary estate in equal shares to my children.”
As you can see from the example above, the specific bequests are the engagement ring, the car collection, and the specific amount of money. The residuary clause is everything else in the estate besides the ring and the car. This may include bank accounts, real estate, personal property, life insurance and retirement accounts, etc.
Why is a residuary clause important?
Most well-drafted wills will include a residuary clause. This is because they are incredibly important additions to an estate plan. Here’s why:
Prevents intestacy (and potentially more probate time)
It prevents part of the estate from passing through default laws (intestacy) thereby creating unintended consequences. For example, if you don’t include a residuary clause and only include a specific bequest for your jewelry collection, the rest of your estate (say, a house and a car) will be distributed through default laws, which may not be what you wanted. This may also make the probate process a lot longer.
Provides flexibility for unforeseen assets
If you later incur a lot more assets, such as through inheritance or the sale of a business, you don’t necessarily have to update your will because your residuary clause has you covered.
Protects you from forgetting certain assets
If you have a large and complex estate, remembering every single asset you have can be difficult. Including a residuary clause can ensure that everything you own is accounted for in your will and distributed to the right person.
Fills in the Gaps
Life can change quickly, and you might not be able to update your will fast enough. For example, you might acquire new property or assets after drafting the will. The residuary clause automatically ensures that anything acquired later will be distributed according to the residuary provision, even if you didn’t have the chance to update your will to reflect those changes.
Reduces potential family disputes
If there is a will with only certain bequests but several assets left out, it could create conflict among family members. For example, let’s say you devised your jewelry collection to your son, Tom, in your will and then your car to your daughter, Ashley. Ashley and Tom may be in dispute over who should get the rest of the estate based on what was previously written in the will. Maybe the car is worth a lot more than the jewelry, and Tom thinks he should get more of the estate. This could lead to disputes over the will and estate.
What to consider when drafting a residuary clause in your will
Drafting a residuary clause is an important aspect of any well-written will. Here are some things to consider:
- Make sure you use clear and concise language (avoid ambiguity)
- Identify beneficiaries by full names and relationships
- Consider devising residuary estates by percentages rather than fixed amounts to make sure everything is covered. Be specific about percentages.
- Consider subsequent beneficiaries should one of the beneficiaries pass away.
Here’s an example of residuary clause wording:
“To Matt Jones, my brother, I give my entire prized record collection. To Melissa Jones, my sister, I give my entire jewelry collection.
Except for the specific bequests listed herein, I give 50% of my residuary estate to my aunt, Mary Jones, and the other 50% of my estate to my best friend, Austin James.
Should Mary Jones or Austin James not survive me, I give their portion of my residuary estate to my neighbor, Ashley Harrison. By way of example, if Mary Jones does not survive me, but Austin James does, Ashley Harrison shall receive 50% of my residuary estate. If neither Mary Jones nor Austin James survives me, Ashley Harrison shall receive 100% of my residuary estate.”
The bottom line on residuary clauses
Any well-drafted will includes a residuary clause. It allows for flexibility in case you have an increase in assets, it covers you if you forget certain assets in your will, and can help avoid family disputes. Residuary clauses are easy to include in your will and can be simple additions. Just remember to be concise and unambiguous, consider using percentages for the residuary estate, and consider appointing subsequent beneficiaries should anyone pass away before you. At the end of the day, including a residuary clause in a will is a step towards protecting your loved ones and giving you peace of mind.
Katherine (Kathy) Bakes is the founder and managing attorney of Bakes Law LLC. Her eleven years of practice involves all aspects of family law, including the formation of prenuptial and postnuptial agreements, divorce and legal separations, child custody, child support, and visitation agreements, spousal support and financial settlements. Kathy also engages in the practice of estate planning including the formation of wills, revocable and irrevocable trusts, durable powers of attorney, health care proxies, HIPAA authorizations and living wills. Kathy is a member of both the Connecticut and Massachusetts state bars after receiving her Juris Doctorate degree from New England Law | Boston. Kathy lives in Southport, CT with her husband and toddler. Outside the office, Kathy enjoys playing the piano and teaches music education to students of all ages.
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