The Leftovers: your residuary estate and why it's important

Friday Photos: Birds, politicians and protesters

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Important disclaimer: Any legal analysis in this publication does not in any way constitute legal advice, nor does reading it create or imply an attorney-client relationship. Portions of this publication may be considered an advertisement or advertising material under the Rules of Professional Conduct governing lawyers in the Commonwealth of Virginia and District of Columbia. If you live in Virginia or DC and need a lawyer to assist you in your estate plan, please contact me directly at pyabut@prylaw[dot]com for a free consultation.

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Yummy leftover homemade pizza. Pro-tip: use a toaster oven to reheat.

Generally a will contains three types of property to be distributed: direct bequests (gifts) to specific individuals, property to be held in trust for someone else ("testamentary trusts"), and the residuary estate.

The residuary estate contains all of the assets leftover after direct bequests, testamentary trusts, taxes, administrative fees, and creditors’ claims.  In other words, it is what remains after you have given everything away to those whom you specify in the will as well as costs and money owed to third parties.  Furthermore, any specific bequests that lapse before you die (for example, gifts to specific people who die before you do) automatically pass into the residuary estate.

Why is the residuary estate important?

In the probate process, all taxes, administrative fees, and creditors' claims are paid out of the residuary estate before it passes to your named beneficiary or beneficiaries in the will.  Therefore, if you have precious family heirlooms or other items that you want other people to have after you die, it is important to specify them as gifts to keep them safe from probate.

Must-have: the residuary clause

What happens to your residuary estate is not automatic. Without guidance in the will, the probate court would have discretion to distribute the residuary in accordance to the jurisdiction’s intestate succession laws. Therefore, it is important to include a provision in the will designating a beneficiary and a contingent to receive your residuary estate.

Friday Photos: Out and about

Birds, birds, birds

On April 21, my kid and I went to Blackwater National Wildlife Refuge on Maryland’s Eastern Shore of the Chesapeake Bay, and Bombay Hook National Wildlife Refuge in Delaware.