Many people overlook their residuary estates. During estate planning, the focus is often on the highest-value assets the testator owns. People want to address their financial accounts, business holdings and real property. Their resources that are worth six figures or more command the most attention.
All too often, testators become so focused on properly planning for their most valuable resources that they fail to properly address the remainder of their assets. The residuary estate is the property that remains after the personal representative of an estate fulfills the decedent’s financial responsibilities and distributes their major resources in accordance with the estate plan.
The residuary estate may include personal property and smaller financial accounts. Testators need to address those assets, or their loved ones may end up fighting over them.
The residuary estate could be worth thousands
After accounting for high-value property, the assets that remain in an estate could still represent a significant amount of money. Residuary estates often include personal property such as furniture, kitchenware, clothing and collectibles. While the value of those resources may pale in comparison with the fair market value of real property or retirement accounts, the residuary estate can still trigger conflict among beneficiaries.
Any assets that people fail to address in their estate plans can become a point of contention among their loved ones during estate administration. Both grief and greed can contribute to disputes about the residuary estate. Testators may need to think about the most appropriate solution for the remaining assets in their estate after the fulfillment of their financial obligations and the distribution of their most valuable assets.
Some people allow one person to inherit their residuary estate. Others instruct their personal representatives to liquidate those remaining assets and distribute the proceeds among specific beneficiaries. People can even arrange to have the residuary estate transfer to a trust in some cases.
Addressing any remaining assets may limit the likelihood of family members arguing among themselves about such assets or filing a lawsuit in probate court because of them. Recognizing that any assets may cause conflict among beneficiaries can help people craft more effective estate plans. People who address their residuary estates may protect their loved ones from relationship-ending conflicts and probate disputes that could consume estate resources.