No matter how detailed you are in your will about listing the beneficiaries of your various assets, you’re sure to leave something out. Even if you neglect nothing when you draft your will, you’ll likely accumulate other assets later.
You don’t want to modify your will every time you acquire something new (unless it’s a highly valuable asset like a home or car). That’s why having a residuary clause in your will is crucial.
What is included in your residuary estate?
A residuary clause details what will happen to your residuary estate. This includes any asset:
- For whom no beneficiary has been named
- Left to a beneficiary who has predeceased you and for which there’s no designated contingent beneficiary
- Declined by the beneficiary (when there’s no contingent beneficiary)
Note that the residuary estate is what remains after debts, taxes and other expenses are paid from the estate.
Who gets the “estate residue?”
In your residuary clause, you’ll name a “remainder beneficiary” who will take possession of these items. You can name your executor or any person you trust. You can designate that you want all items donated to charity or sold with the proceeds returned to the estate. You may also designate that the remainder beneficiary uses their own judgment about what to do with them.
What happens if you don’t address your residuary estate?
If you don’t include a residuary clause in your will to address these assets, they will need to be disbursed by a probate court under the Indiana intestacy laws or without a will. This will only add to the time and effort needed to settle your estate.
Including a residuary clause in your will is fairly simple with the right legal guidance. There are also strategies for minimizing the assets that end up in your residuary estate. There’s a lot more to learn about how having a well-crafted estate plan can make things easier for your loved ones after you’re gone.