When looking into your estate plan, you see the term “residuary estate.” This is any part of your estate that hasn’t been distributed to your heirs through a will. It’s also called estate residue or residual estate. What are residual assets in your estate? It simply means assets that are left over once your will’s been read, the assets have been distributed to your heirs and any final expenses have been paid. At Beck & Lenox Estate Planning & Elder Law, LLC, we do our best to inquire about all possible assets a client might possess in order to avoid these “leftover” assets.
Proper estate planning can help you avoid leaving assets behind, says Yahoo Finance’s recent article entitled “Residuary Estate Definition and Example.” An experienced estate planning attorney can help you select a structure for your estate that accomplishes your objectives.
A will lets you state how you want your assets to be divided among your heirs when you pass away. However, it’s possible that not all of your assets will make it into your will for some reason. Any assets that aren’t included in your will or distributed through a trust automatically become part of your residuary estate when you pass away.
Residual estates can be created without advance planning. For example, your heirs may be left to deal with a residuary estate if:
- You neglected to include certain assets in your will;
- You acquired new assets after drafting your will and failed to amend the document for the distribution of these assets; or
- Someone you named in your will dies before you or is unable to receive their inheritance for some other reason.
Assets that are designed to have a named beneficiary but don’t have one, can also be included in the residuary estate.
When a residuary estate exists, it can complicate the probate process for your family. Any unclaimed or otherwise overlooked assets would be distributed according to the state’s inheritance laws, after any estate taxes, outstanding debts or final expenses have been paid.
You should also know that it’s possible to have a residuary beneficiary of a living trust. This person would receive any property or assets transferred to the trust that were not designated for specific beneficiaries. If you create a trust properly, there should be a provision for each beneficiary you want to be included and which assets they should receive. However, you could still run into issues if a named beneficiary dies, and you haven’t named anyone as a residuary beneficiary.
Residual assets in your estate is something you may need to plan for when creating a will or trust. Fortunately, it’s pretty easy to do so by including the proper wording in your will and trust documents. Ask an experienced estate planning attorney like Rudy, Jayson, or Caroline at Beck & Lenox in order to eliminate confusion and to plan your estate properly.
Reference: Yahoo Finance (Dec. 30, 2021) “Residuary Estate Definition and Example”