Residuary Estate Lawyers

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What Is a Residuary Estate?

A residuary estate is that part of a deceased person’s estate which remains once all the specific distributions, gifts, and bequests have been distributed to the named beneficiaries, and after all the person’s debts and claims have been satisfied.

A will will usually have a Residuary Clause that gives the residuary legatee instructions in what to do with all the property that has not been disposed. The residuary clause may include bequests that are void or have lapsed.

Why Should a Will Have a  Residuary Clause?

Its a good idea to have a Residuary Clause in a will because this provision will provide instructions on how to dispose property that has not been expressly disposed. A will often contains a residuary clause that gives the right to the residuary estate to name a beneficiary or several beneficiaries. If a will does not contain a residuary clause, then any property that has not been specifically distributed to anyone would pass to heirs through intestate succession laws of your state.

What Happens to the Residuary Estate?

Depending on the person’s estate, and state laws, there can be several different things that can happen to the residuary estate. First, the estate holder may actually appoint a specific person who will inherit the residuary estate. This person is known as the “residuary beneficiary”, “residuary taker”, or “residuary legatee”. 

The specific details of this transfer are contained in a clause in the will known as the “residuary clause” or “residuary bequest”. In many cases, the residuary taker is a charitable organization.

If there is no residuary estate clause, the residual estate may sometimes pass to the testator’s heirs based on the intestacy laws in that jurisdiction. Or, in some instances, the residual estate may escheat back to the state.

What Are Some Common Residuary Estate Legal Issues?

Disputes over the distribution of the residuary estate may arise, especially if the residual represents a significant net worth. For example, one person may be claiming rights to the residual estate, while another person may be claiming that it should go to a charity. 

In most cases, disputes are handled through an official court hearing that would determine how the residuary estate should be processed. This usually requires the courts to re-examine the testator’s will and any other documents that might indicate how they wished their residual estate to be handled. This is why it’s very important that the residuary beneficiary be clearly named and identified in order to avoid disputes.

How Do I Distribute the Residuary Estate?

As the estate executor, you must distribute the estate's residue, or left over property, after you have paid all the decedent's debts, administration expenses, funeral costs, gifts, and devises. The decedent might have left instructions in the will that provides the distribution of the left over assets.

Here are some ways to distribute the residuary estate:

  1. Pour-Over Trust: If the will leaves the residue to a revocable trust, then the property left over pours over into that trust, and you must transfer the property into the trustee's names
  2. Dividing by Percentage or Fractional Share: If the residue is to go to one or more persons and the will provides that it should be distributed by percentage or fractional share, then it should be divided in accordance to the percentage share each should receive.
  3. Dividing Per Capita (Equal Share): Each person shall get an equal share, no matter what relationship to the decedent.
  4. Per Stripes (Right of Representation): The property must be divided equally at each generation level, with the first issues take his or her share first (children, grandchildren, parents, etc.)

Would Community Property or Joint Accounts Be Part of Residuary Estate?

No. joint accounts and community property is not considered part of the decedents estate. The joint account would pass over to the spouse or co-owner directly at the death of one of the owners. All community property will be split 50/50 and will pass through intestate or under the will.

Should I Hire a Lawyer If I Have a Question or Dispute Involving Residuary Estate Matters?

Residuary estate matters can be very complex, and the laws governing them can vary from region to region. If you have any questions or legal disputes involving residuary estates, you should contact an experienced lawyer in your area. Your attorney can provide you with professional legal advice to help you deal with your estate situation. In the event of a lawsuit or a legal conflict, your attorney can provide you with representation during court proceedings.

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Last Modified: 01-19-2015 11:56 AM PST

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