Bringing More Than 25 Years Of Experience To The Austin And Dripping Springs Community

How testators can address their residuary estates

On Behalf of | Jan 21, 2025 | Estate Planning

Many people approach estate planning with the goal of maximizing their legacy. They want to ensure that as much of their property as possible passes to specific individuals. For others, the main concern is the protection of dependent family members.

Those with young children, for example, often go to great lengths to ensure they have support if anything happens to them. In both scenarios, the focus is often on naming trustworthy people to positions of authority and addressing the most valuable assets owned by the testator.

People sometimes make the mistake of ignoring their residuary estates. That oversight may lead to significant conflict among their beneficiaries and protracted probate proceedings.

What is a residuary estate?

The personal representative overseeing estate administration has to follow state law and the instructions provided by the decedent. They identify and create a comprehensive list of all of the assets that belong to the decedent.

They communicate with creditors and handle financial obligations. The personal representative may need to liquidate certain estate assets to repay creditors and cover tax obligations. They may then distribute specific assets in accordance with the instructions provided by the testator.

What remains after the completion of those steps is the residuary estate. The residuary estate often contains sundry personal assets such as furniture, clothing and kitchenware. People overlook these assets because they do not represent the same value as real property, vehicles and other high-value assets.

What can testators do with their residuary estates?

There are three different solutions people commonly employ for addressing their residuary estates. Some people instruct the personal representative of their estate to conduct an estate sale. They attempt to sell whatever remains after the main property distribution process is complete and can then distribute the proceeds of those sales in accordance with the testator’s instructions.

Sometimes, testators leave instructions to donate their residuary estates. Charitable organizations that provide support for indigent people, for example, are often happy to accept donations of housewares, furniture and clothing.

Testators can also name a specific beneficiary to inherit the residuary estate. While personal property may not seem as important as real property and financial resources, residuary estates can represent tens of thousands of dollars in financial value.

Creating a thorough estate plan often involves addressing minor assets, major assets and possible complications. The residuary estate is one of many estate planning issues that people may overlook when they do not have the proper support when creating or updating an estate plan.