When you sit down to plan your estate and designate beneficiaries for your largest assets, you probably already know what assets are worth the most. Your home, your cabin, your investment accounts and your small business could all be assets that you carefully plan for to ensure the right person receives those assets and to minimize the possibility of tax issues or creditor claims.
With all of the focus on your most valuable assets, you might potentially overlook other property that could benefit some of your family members. Many people fail to consider the value of a residuary clause but would benefit from including one in their will.
What is a residuary clause?
Any assets that you do not specifically name in your will or other testamentary documents, like a trust, will be your residuary estate. Those remaining assets may have both profound emotional value to the people who love you and also significant financial value.
Although you may not think much of your movie collection or your antique records, your family members might view such assets fondly and hope to keep them as a reminder of you. You need to think about what will happen to your personal possessions after you die so that the right people will benefit from those assets.
Including more belongings by name in your estate plan is a good idea, as is including a residuary clause that grants any remaining property to a specific beneficiary after your death. Some people will use a residuary clause as a means of instructing the executor of their estate to gather the rest of their assets and then sell those belongings. Multiple beneficiaries could then benefit from the financial value of those assets.
Reviewing your estate plan is always a smart move
It is easy to overlook certain details when you first create an estate plan, and you have no way of knowing how your personal situation will change as the years pass. Most testators will find that frequently reviewing and updating their estate plans, including what property they mention specifically and who receives assets, will give them the most control over their estate and the most protection from an unpredictable world.
Including the right terms in your estate plan will maximize the impact your legacy has on others.