When you create a will, you want to be sure that every asset you own is accounted for and distributed according to your wishes. However, no matter how carefully you plan, there is always a chance that some property might not be specifically listed in your will.
That is where a residuary clause comes into play. This important provision helps protect your estate from unintended gaps and ensures your loved ones are not left dealing with confusion or legal complications.
Defining a Residuary Clause
A residuary clause is a section of your will that directs what happens to the remainder of your estate after all specific gifts, debts, taxes, and expenses have been paid.
In simple terms, it handles anything that is left over. This might include assets you forgot to list, newly acquired property, or anything that was not clearly addressed elsewhere in your estate plan.
For example, you may have specific bequests for your home, your car, and your jewelry, but you might not mention your savings account or a piece of artwork you purchase later in life. The residuary clause steps in to catch these items and distribute them according to your instructions.
Why It Matters
Without a residuary clause, any unaddressed assets become part of what is called an “intestate estate.” This means that Connecticut’s intestate succession laws would determine who receives that property.
Those laws might not align with your personal wishes and can lead to unintended outcomes. Including a residuary clause helps you stay in control of your estate, even when unexpected assets surface.
Another important reason to include a residuary clause is the possibility that a named beneficiary might predecease you or choose to disclaim their inheritance. If there is no backup plan in place, the property meant for that person could fall into the residuary portion of your estate.
Your residuary clause ensures that this property is not left hanging without clear instructions.
What Can You Include?
Your residuary estate can be directed to a single person, divided among multiple beneficiaries, or even left to a charity. The flexibility of a residuary clause makes it a valuable tool for creating a complete estate plan.
You can also include contingent provisions, which name alternative beneficiaries if your primary choices are no longer living or cannot accept the inheritance.
Additionally, a well-drafted residuary clause can specify how to handle complicated situations. For instance, you might decide that if one of your residuary beneficiaries passes away before you, their share should be divided among their descendants or redistributed to the other named beneficiaries.
How It Fits into a Broader Estate Plan
The residuary clause works alongside other parts of your estate plan to provide full coverage. It does not replace specific bequests or beneficiary designations on accounts like life insurance policies or retirement funds.
Instead, it acts as a safety net to cover anything left out of your plan’s detailed sections.
If you have a revocable living trust, your trust typically includes language that plays a similar role. However, it is still common to have a “pour-over” will with a residuary clause that directs any remaining probate assets into your trust.
This approach helps keep your plan cohesive and reduces the chance that any assets will fall through the cracks.
Avoiding Common Pitfalls
A residuary clause is a powerful tool, but it must be crafted carefully. Vague language can cause disputes or confusion, and unclear provisions may lead to court involvement.
To avoid these issues, you should work closely with a licensed estate planning attorney who can help you tailor your residuary clause to your unique circumstances.
It is also essential to review your estate plan regularly. As your financial and personal situation changes, your plan may need updates to keep everything aligned with your current goals.
The residuary clause provides important protection, but it works best as part of a thoughtfully maintained estate plan.
Join Us at an Upcoming Learning Event!
Summer is here, and it’s a good time to get out and take advantage of learning opportunities. With this in mind, we have scheduled a series of seminars at locations near our two offices, which are in Glastonbury and Westport, CT.
These events are offered on a complimentary basis, and you can click the following link to learn more: CT Estate Planning Events.
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