Estate planning is very technical and requires a lot of planning. However, there are safeguards in place to protect your wishes in case you forgot to address each and every asset you own. One safeguard that every estate plan should include is a residuary clause, which states who gets any assets, or the sale proceeds, not specifically gifted elsewhere within the will or trust. Essentially, a residuary clause is a catch-all provision that allows a testator (of a
will) or a settlor (of a
trust) to ensure that all of his or her assets pass as he or she wishes.
Assets that are not specifically gifted elsewhere in the will or trust fall into the catch-all residuary estate. Who receives these residuary assets is controlled by the residuary clause.
An example of a very simple residuary clause is "I leave all my other assets, not specifically gifted elsewhere [in my will (or trust)] equally to my two children by right of representation."
Alternatively, a residuary clause can be more elaborate and provide for a variety of unforeseen contingencies. For example, the residuary clause might provide that the first $100,000 of the residue estate goes to the grandchildren in further trust, that next $10,000 goes to certain charities, and that all of the remainder of the estate goes to certain other persons based on various percentages, with alternative beneficiaries named.
Without a residuary clause, any later acquired assets, any specific gifts which fail, and any extra assets that fall into the probate estate will all pass under the laws of intestacy. Be sure that your estate plan includes a residuary clause to keep these events from occurring. Contact one of our experienced estate planning attorneys to review an existing or create a new estate plan today. Call Atlantis Law for a free consultation.