What is a residuary estate?

An estate consists of all of the property owned by an individual who has died. After a person’s passing, control of their property transfers to their estate. It is then under the management of the personal representative appointed by the probate courts or named in their estate planning documents.

Personal representatives must fulfill financial obligations owed by the decedent or the estate and then distribute assets in accordance with state law or estate planning paperwork. Frequently, they may face challenges if the person who passed did not provide instructions for their residuary estate.

Those creating or updating an estate plan may want to address their residuary estates to avoid conflict or confusion after they die.

Every asset requires consideration

A residuary estate consists of any assets not specifically addressed in an estate plan. If a will only addresses real property, vehicles and financial accounts, all of the other assets owned by the deceased person then become their residuary estate.

Depending on the extent of a person’s holdings and their standard of living, a residuary estate can be worth tens of thousands of dollars or even more. It can trigger intense conflict among beneficiaries, who may want to retain assets with emotional value or reap the financial rewards of selling that property.

Testators creating estate planning documents can choose beneficiaries to inherit their residuary estates or make arrangements for the sale of those assets. Addressing personal property and other assets not included specifically in a will is an important move for those who want to limit conflict after their passing. Seeking personalized legal guidance is a great way to get started.