California Estate Planning: The Importance of Residuary Clauses in Wills and Trusts

In California Estate Planning, both for Last Wills and Testaments ("Wills") and for Trusts, there is a need for "residuary clauses." Indeed, it is best said that Wills and Trusts MUST contain residuary clauses. In this article, the California Estate Planning attorneys at the Guardian Litigation Group explain what California residuary clauses are and why they are crucial. For a consultation, reach out through our contact page or call by phone at (800) 316-3133.

What is a Residuary Clause?

As background, understand that Wills and Trusts generally contain specific bequests/gifts. Examples might include: "I bequeath my blue antique Ford Mustang to my Son, Herbert...." or "I specifically give my coin collection and all monies in my [NAME OF BANK] financial account to my Sister, Maria..." Alternatively, Wills and Trusts can bequeath/give assets in percentages like: "I hereby give to my daughter, Erica, one-fourth (25%) of all of my assets..."

However, when drafting California Estate Planning documents, there are a couple of practical problems. First, what happens if a person who is bequeathed an asset predeceases the person making the Will or Trust? Take Herbert in the above example. Who gets the blue antique Ford Mustang if Herbert dies first? The other practical problem is that, very commonly, assets will not be listed in a California Will or Trust either because of omission or because the assets in question were obtained after the Will or Trust was made. Another problem concerns assets that are not known at the time of the making of the Will or Trust. Maybe the maker of the Will or Trust did not even know he or she had some asset or interest in an asset.

The general problem here is that after specific bequests are distributed to the heirs and beneficiaries, there may be assets left over that have not been mentioned. To resolve this general problem, residuary clauses are used. Residuary clauses identify the person, trust, charity, or not-for-profit that is to receive any assets that are not otherwise identified distributed. An example of a California residuary clause might read (in part) as follows:

“I hereby bequeath and give all the rest and remainder of my property and estate of every kind and character which is not otherwise effectively disposed of, to … [PERSON OR ORGANIZATION]”

The words "all the rest and remainder" signifies that any assets not otherwise bequeathed are to be given to the person or entity listed. There are various effective ways to state a residuary clause, but the key is to clearly express that what is "left over" is to be given to some person(s) or organization(s). Note that, as with any set of assets in a Will or Trust, the residuary clause can identify more than one person/organization and can, for example, give the residual assets in percentages to those so identified.

Why are California residuary clauses important?

California residuary clauses are important for several reasons. First, as the person making the Will or Trust, you want to have control over who receives your assets upon death. Without a residuary clause, the distribution of those residuary assets will be determined by a California probate judge. Second, you want the disposition of your assets to be as simple as possible. This saves time, money, and emotional toll on your loved ones. Without a residuary clause, your heirs may come into conflict, and, as noted, a California probate judge will have to decide how those residual assets are distributed.

Contact Our Experienced Irvine, CA, Estate Planning Attorneys

For more information, contact the Irvine, California, Estate Planning attorneys at Guardian Litigation Group. Our Mission is to provide unparalleled Estate Planning legal services for our clients. We can be reached via our contact page or by phone at (800) 316-3133. We are located in Irvine, California.