When you’re creating a will, it’s easy to focus on the big-ticket items—who gets the house, the car, or treasured family heirlooms. But there’s a crucial detail often left out: the residuary clause. This clause dictates what happens to the rest of your estate, which includes any assets not specifically named in your will. Without it, even a meticulously planned estate can fall into a legal gray area, creating unnecessary stress, expense, and conflict for your loved ones.
What is a residuary clause?
Think of a residuary clause as a safety net for your will. It distributes the “residue” of your estate—everything left over after specific gifts have been handed out and all debts, taxes, and administrative costs have been settled. This can include anything from a forgotten bank account and newly acquired property to investments you didn’t explicitly mention.
For instance, say your will leaves your classic car to your son and your jewelry collection to your daughter but doesn’t mention your savings account. Those funds become part of your estate’s residue. A residuary clause ensures that money goes where you want it, whether to a specific person, a group of heirs, or even a charity you support.
What happens if you don’t have one?
Leaving out a residuary clause can cause major headaches. When assets aren’t covered by your will, they’re treated as “intestate property.” This means they’ll be divided up based on state laws, not your wishes. In some scenarios, this could mean distant relatives you barely know could inherit a portion of your estate, or assets could go to people you never intended to benefit.
Without this clause, your executor or family might have to go to court to figure out what to do with the leftover assets. That means more time, more legal fees, and more emotional strain during an already difficult period.
The absence of a residuary clause can also stir up family disagreements. When the law dictates who gets what instead of your will, heirs may argue over what you would have wanted. A simple clause can prevent these conflicts and help keep the peace.
A safety net for life’s changes
One of the biggest advantages of a residuary clause is the flexibility it provides. Life is unpredictable—you might acquire new assets, open or close accounts, or see property values change.
Since most wills don’t list every single asset you own, a residuary clause acts as a catch-all, ensuring nothing is left unaccounted for. It can even cover unexpected windfalls, like insurance payouts or lawsuit proceeds that come through after your passing.
Your partner in planning
Including a residuary clause is one of the smartest and simplest moves you can make to ensure your entire estate is managed exactly as you envision. It helps eliminate gaps in your estate plan, cuts down on legal complications, and allows your executor to distribute your assets smoothly.
At SD Mayer, we’re more than just accountants; we’re your partners in securing your financial future. We’re here to help you make smart decisions that protect you and your loved ones. Talk to your estate planning attorney about adding a residuary clause to your will, and let’s make sure your legacy is in good hands.
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Securities offered through Valmark Securities, Inc. Member FINRA, SIPC. Fee based planning offered through SDM Advisors, LLC. Third party money management offered through Valmark Advisers, Inc a SEC registered investment advisor. 130 Springside Drive, Suite 300, Akron, Ohio 44333-2431. 1-800-765-5201. SDM Advisors, LLC is a separate entity from Valmark Securities Inc. and Valmark Advisers, Inc. Form CRS Link
DISCLAIMER:
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. The services of an appropriate professional should be sought regarding your individual situation.
HYPOTHETICAL DISCLOSURE:
The examples given are hypothetical and for illustrative purposes only.