Avoiding Gaps in Your Will: The Role of the Residuary Clause

When preparing a will, many individuals focus primarily on the disposition of major assets, such as real estate, vehicles, and specific family heirlooms. Sometimes, less visible provisions can receive less attention. One example of such is the residuary clause, which addresses how remaining assets — those not specifically mentioned in the will — are handled. Without one, even a carefully planned estate can end up in legal limbo, causing unnecessary stress, expense, and conflict for loved ones. In high‑net‑worth estates, especially, residuary clauses may fail to properly incorporate new assets acquired after a will is drafted.

What Is a Residuary Clause?

A residuary clause is the part of a will that distributes the “residue” of an estate, which includes any assets left after specific bequests, debts, taxes, and administrative costs have been paid. It might include forgotten bank accounts, newly acquired property, or investments that are not specifically named in the will.

The residuary clause ensures that any overlooked funds are distributed according to the testator’s wishes, often to a named individual, group of heirs, or charitable organization.

The Risks of Omitting a Residuary Clause

Failing to include a residuary clause can create serious problems. When assets aren’t covered by specific instructions in a will, they’re considered “intestate property.” This means those assets will be distributed according to state intestacy laws rather than a decedent’s personal wishes. In some cases, this could result in distant relatives inheriting part of an estate or assets going to individuals who were never intended to receive them.

Without a residuary clause, the executor or decedent’s family members may also need to seek court intervention to determine how to handle the leftover property. This adds time, legal costs, and emotional strain to an already difficult process.

Moreover, the absence of a residuary clause can lead to family disputes. When the law, rather than a will, determines who gets what, heirs may disagree over how to interpret intentions. A simple clause could prevent these misunderstandings and preserve family harmony.

Adding Flexibility in Estate Planning

A key advantage of a residuary clause is the added flexibility it provides. Life circumstances change, new assets are acquired, accounts are opened or closed, and property values fluctuate.

If a will doesn’t specifically list every asset, a residuary clause acts as a safety net to ensure nothing is left out. It can even account for unexpected windfalls or proceeds from insurance or lawsuits that arise after an individual’s passing.

As is the case with most aspects of estate planning, the residuary clause is not something that should be dismissed once addressed. However, it is important to note that it can be undermined if a named residual beneficiary predeceases the testator and no alternate beneficiary is identified.

Avoiding Complications and Disputes  

Including a residuary clause can help prevent gaps in an estate plan, reduce the risk of legal complications, and support the efficient distribution of assets by an executor. For those who may have overlooked this provision, consider consulting with an estate planning attorney to ensure a residuary clause is appropriately incorporated into the will.

For more information or to discuss this matter in greater detail, contact your Anchin Relationship Partner or Tamir Dardashtian, a Tax Principal in Anchin’s Private Client Group.