What Is “Residuary Estate” in a Will?
Whereas “residue” might make you think of the nasty bits in your kitchen’s drain, there is nothing distasteful about being appointed the beneficiary of a residual estate. When you are preparing a will or are appointed in a will as one, you are going to need to comprehend the phrase.
Estate Planning: Who Receives What?
Estate planning can include a lot of legal elements, such as living trusts and POA, but a will is usually the most vital. A will establishes in writing who receives your assets when you pass away.
How does that work? You create lists of certain beneficiaries, usually relatives or close friends, to whom you want to bestow specific assets. For instance, you might want to leave your house to your favorite cousin, and other property to your sister. Or perhaps you want to leave a special necklace or other personal property to Uncle Charlie as a certain bequest.
When your will undergoes probate, that property passes as stated by the instructions in your will.
When you devise a will, it’s easy to assume that your family members and friends are going to be alive when you pass away. But there is no guarantee that this is going to be the case. That’s why appointing alternate beneficiaries for specific gifts is critical.
The alternate beneficiary is an individual that will inherit a specific gift if the appointed beneficiary passes away before the testator. For instance, your will may state that a vase passes on to Uncle Steve, but if he is not alive, it passes on to Aunt April. In this instance, Aunt April is the alternate beneficiary.
Residuary Clause: Who Receives the Leftover Assets?
In airtight estate plans, every part of property in the deceased individual’s estate passes to a chosen beneficiary. However, few wills are this comprehensive. Usually there are items of personal property remaining.
For instance, someone creating a will may not include specific inheritances for smaller items such as home decor or that old VHS collection. And what about the boxes that have been in storage for so long that no one remembers what’s inside them?
That is the reasoning for appointing a residuary beneficiary. This beneficiary takes the leftovers, terminology that would work properly as a definition of a residuary estate. Equally, the word “residue” and the term “residual” stem from the Latin word that means “to be left behind.” Whichever assets are remaining after the executor allocates all of the specific gifts are, in sum, the residuary estate.
Who Receives the Residuary Estate?
Anyone preparing a will needs to address appointing a residuary beneficiary. Include their name in a residuary clause, the portion of the will that distinguishes the residuary beneficiary.
What does a residuary legatee receive? That is subject to the conditions of the will and who survives. The individual appointed to inherit the residuary estate receives all the property and assets leftover in the probate estate following the executor allocating particular gifts and pays estate liabilities.
Comprehending the Probate Process
It is easier to get summary of how a residuary estate inheritance operates if you comprehend something concerning the probate process. When an individual passes away leaving a legitimate will, the executor is going to file the will with a probate court.
An executor is the individual is responsible for advancing the estate through probate. Their role is to allocate the estate according to the conditions of the will. To accomplish this, the executor is required to gather all estate assets, from real estate to financial institution accounts, and determine estate liabilities, including things such as the decedent’s credit card bills in addition to proposed probate expenses and estate taxes.
When the estate includes enough capital for covering the debts, the executor allocates specific bequests to the initial beneficiaries. When one or more of the initial beneficiaries isn’t still living, that individual’s gift goes to the alternate beneficiary. If both the initial and alternate beneficiaries have passed away, the gift stays part of the estate.
After the executor pays the estates bills, everything remaining is part of the residuary estate and passes to the individual appointed in the residuary clause. It is also going to include that old VHS collection and all the other things that were not designated to a beneficiary in the will. It also going to include particular gifts if neither the initial nor the alternate beneficiary lived.
What is “residuary estate” in a will? FindLaw. (2022, December 8). Retrieved December 8, 2022, from https://www.findlaw.com/estate/wills/what-is–residuary-estate–in-a-will-.html
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