Rather than listing out every specific asset they owned, I used a residuary clause to accomplish their goals. They became alarmed when they read their Wills because they were concerned that an item not specifically identified would not pass according to their wishes.
What is a Specific Gift?
It is possible to make a specific gift in a Will. A specific gift identifies a particular item and the individual, entity, or charitable organization to which it will be distributed.
For example, a testator could specify that “my Lenovo computer shall be distributed to my friend, John Doe.” If a specific gift of the estate is made, then that identified asset will not be part of the residue of the estate.
What is the Residue of an Estate?
In legal terms, a “residue” of the estate is what is left of the estate after payment of debts, funeral expenses, executors’ fees, taxes, legal and other expenses incurred in the administration of the estate, and after any gifts of specific assets or specific sums of cash. This would include all property, real and personal.
What is a Residuary Clause?
A residuary clause is a provision in a Will that passes the residue of an estate to beneficiaries identified in the Will. For example, a testator could say: “I give all of the residue of my estate to my wife if she survives me. If my wife fails to survive me, I give all of the residue of my estate to my son.”
If no specific gifts have been made in the Will, then all the residue of the testator’s estate would pass to his wife, if she survives him, or to his son if his wife died first. The vast majority of a decedent’s assets often pass according to the terms of a residuary clause.
Why is a Residuary Clause Important?
A residuary clause is a very important part of a Will because it ensures that all the testator’s estate, known or unknown, will pass according to his wishes.
Wills that include only specific gifts are risky because:
- They may inadvertently leave out assets acquired after the testator’s Will is signed.
- The person to whom a specific gift is made may predecease the testator, and no alternative beneficiary is named.
- Additionally, it is possible that certain non-probate assets may revert to the probate estate. For example, if no beneficiary is identified on an insurance policy, the proceeds of that policy will become a part of the decedent’s probate estate.
Without a residuary clause, these assets will pass according to the intestacy statutes to individuals the testator may have wanted to omit. For an example of this, read: The Cost of a Do-It-Yourself Will.
This is why every attorney drafted Will has a residuary clause.