Legal Definitions - residuary clause

A residuary clause is a specific section within a will that addresses any property or assets remaining in an estate after all other specific gifts and bequests have been fulfilled. It acts as a "catch-all" provision, ensuring that no part of the estate is left undistributed due to oversight, unforeseen circumstances, or the failure of a specific gift.

Here are some examples to illustrate how a residuary clause works:

• Example 1: Distributing the "Leftovers"

  Imagine a person named Sarah who writes a will. In her will, she specifically gives her antique jewelry to her daughter, her classic car to her son, and $10,000 to her favorite charity. After listing these specific gifts, her will includes a residuary clause that states, "All the rest, residue, and remainder of my estate, both real and personal, I give, devise, and bequeath to my husband, David."

  How this illustrates the term: This clause ensures that all other assets Sarah owns—such as her bank accounts, investment portfolios, furniture, and any other personal belongings not specifically mentioned—will pass to David. It prevents any property from being left without a designated recipient after the specific gifts are distributed.

• Example 2: Handling Failed Gifts

  Consider a will where John leaves his valuable stamp collection to his nephew, Michael. However, tragically, Michael passes away before John does. If John's will did not have a residuary clause, the stamp collection would become "undistributed" property, potentially leading to a complex legal process to determine its rightful heir. But if John's will contains a residuary clause stating, "The remainder of my estate shall be divided equally between my two sisters, Emily and Susan," then the stamp collection, which could not go to Michael, would instead be distributed to Emily and Susan.

  How this illustrates the term: This example shows how a residuary clause provides a fallback plan for specific gifts that cannot be fulfilled. It ensures that even if a beneficiary is no longer able to receive a gift, the property still passes according to the will-maker's general intentions, rather than becoming intestate (property without a will).

• Example 3: Accounting for Newly Acquired Assets

  Suppose Maria writes a will in which she bequeaths her primary residence to her brother and a specific sum of money to her niece. Years later, she unexpectedly inherits a substantial sum of money from a distant relative and uses it to purchase a vacation home and invest in several new stocks. Maria never gets around to updating her will to specifically mention these new assets. Her will, however, includes a residuary clause that states, "I give all the rest and residue of my estate to my children, equally."

  How this illustrates the term: The residuary clause ensures that the vacation home, the new stock investments, and any other assets Maria acquired after drafting her will (and didn't specifically mention) will be distributed to her children. It prevents these newly acquired assets from being left out of the will's distribution plan, demonstrating its function as a comprehensive "catch-all" for the entire estate.