When it comes to estate planning, it is important to have a last will and testament that has all the necessary parts. Under Arizona law, a well prepared will usually needs something called a residuary clause. A residuary clause is a part of that last will and testament to pass all other items that a deceased person may own at the time of their death to the beneficiaries identified in the will.
Assets refer to anything of value owned by an individual. Examples of large assets can include real estate like your house, bank accounts, stocks and bonds, and vehicles. Smaller assets include items of a more personal nature to the owner, such as clothes, jewelry, musical instruments, gardening tools, and just about anything the individual values and wishes to gift to someone or some charity. An item does not require a market value to be considered an asset; a scrapbook filled with old photographs can be classified as an asset just as easily as an antique cigar case.
Now when it comes to listing assets and assigning beneficiaries in an estate plan, especially in a last will and testament, many of the smaller assets may be overlooked since most of the attention will be on the larger assets. A 25-acre tract of land outside of Phoenix would probably be a valuable asset you would wouldn’t miss assigning to a specific beneficiary. On the other hand, a beloved but battered children’s book might escape your attention yet be appreciated by your child. A residuary clause may make sure your child will inherit items of sentimental value to you both.
Think of a residuary clause like a net underneath to catch anything that wasn’t identified or specifically gifted and will be given to the beneficiaries of the will.
After all the estate’s debts and bills get addressed during probate, the remaining assets will be passed to the beneficiaries as listed in the last will and testament. Any assets not specifically assigned to a beneficiary become classified as residuary assets and will ten be distributed accordingly.
A residuary clause helps ensure those residuary assets pass to the beneficiaries. It would sort of be like if you left a will that said “I leave my house to Nancy, my car to Sid, and my dog to Joey. Everything else goes to Brian.” In this case, Brian would be the beneficiary of the residuary clause.
Residuary clauses can generally be found on a last will and testament after the primary assets. The clause itself usually reads like this: “I give all the rest, residue, and remainder of my estate…” and then names the specific beneficiaries.
Why It’s Needed
Residuary clauses serve two big advantages in estate planning:
• They provide an easy way to lump smaller assets together for distribution.
The estate planner does not have to assign a specific beneficiary to every one of their possessions. Plus, if you aren’t sure how to divide the smaller assets among your beneficiaries, you can pass your residual assets to a group like “your family” or “your friends” and let them decide who gets what.
• They ensure specific items do not end up with unintended beneficiaries.
Take the example of an old children’s book from earlier. If the estate planner fails to list the book as an asset and does not include a residuary clause, the book in question can wind up with the person with the most intestacy, such as a sibling.
Want to learn more about creating a valid last will and testament or estate planning in Arizona? Contact the Nicole Pavlik Law Firm today.