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Does the term residuary estate refer to stocks, money market accounts, and insurance policies as well as my home and vehicle?
Anonymous2 views4 answers
I am looking over my will, and it refers to my residuary estate being divided equally among my children, and does not specifically mention monetary assets invested in places such as mutual funds.
I am wondering if this term includes monetary assets and if this is specific enough for a will. Looking this term up on-line in Wikipedia and other dictionaries does not clarify this for me. Thank you.
The term "residuary estate" means every asset you own which: (1) becomes part of your probate estate at your death, (2) which is not subject to a specific bequest in an earlier part of your Will, and (3) which is not needed to pay your debts, estate administration expenses, and any taxes.
If you own your home, your car, and your mutual funds and bank accounts all in your own name, and if your life insurance is payable to your estate, all of those assets could end up part of your residuary estate.
When drafting a Will, it is generally much better to use formulas and general descriptions such as "residuary estate" than to try to spell out a specific provision for every asset you own. This is because your assets tend to change over time, and if your Will does not self-adjust, you will need to change it every time your assets change. Using more general terms such as "residuary estate" allows the Will to self-adjust to help ensure that assets are divided in accordance with your wishes at your death, no matter what particular assets you may own at that time.
The residuary estate includes all of your assets that are not specifically devised. It could be your entire estate, or there could be specific devises that give away pretty much everything and the residue could be next to nothing. It is whatever is "left over."
The term would include whatever assets you own in your name alone, (without joint owners or beneficiaries designated.) It is not uncommon for Wills to not mention specific assets for two reasons, at least: 1) you may not own the asset at your death; and 2) you could leave something out, either of which would create confusion as to your intentions. Think of the residue as the "everything else" safety net that makes sure your entire estate is covered by the terms of the Will.
James Frederick
Your will may or may not contain specific gifts (specific bequests). Something like "I give my golf clubs to X" or "I give all my household furniture and furnishings to my children who survive me, in shares of equal value to be divided among them by agreement." Your residuary estate is all of your estate which remains after payment of estate settlement costs - debts, taxes, expenses of administration, and satisfaction of all the specific bequests.
It is a commonly used term, intended to mean "everything else" so that nothing is left after distribution of the residuary estate. It certainly includes stocks, bonds, bank deposits and so forth, unless any of these are the subject of a specific bequest.
In order to understand what the term "residuary estate" includes, it might be useful to first understand what it does not include.
Individuals often make specific mention of particular assets - such as cherished collections or designate specific bequests intended for a designated beneficiary. For most people, it is impractical to make a specific gift of each and every asset that they own. Most wills contain specific provisions for special bequests, and specific provisions for the handling of debts, and funeral costs, and taxes. Once those items are addressed, the question of "what about everything else" is bound to arise.
On the other hand, there are a number of assets that may not be controlled by your will at all. For example, insurance policies are generally payable to named beneficiaries. If your insurance policies have named beneficiaries other than your estate itself, the life insurance benefits will not be controlled by your will, but by the beneficiary statements.
Stocks, money markets, homes, and vehicles are sometimes owned by more than one individual. If you have joint accounts, those assets may also pass outside of your will.
The term "residuary estate" conveniently references and addresses everything that is not otherwise addressed as a specific bequest - or - that is controlled outside of your will. It sweeps up the rest of your assets, and allows you to address those assets in the aggregate.
