The main goal of your estate plan is to ensure that your intended beneficiaries will receive what you want them to inherit from your estate. However, it is possible that you will have assets that might not go to any beneficiary and will create a residuary estate. A court may end up deciding where your residuary assets should go.
Per Policy Genius, there are certain ways that you may end up with a residuary estate after your death. If you do not want any assets left over in your estate, learning about these possibilities may help you plan for residuary assets in advance.
Assets with little value
You probably have not given much thought to giving away clothes or dishes in your will. This is understandable since these possessions tend not to be as valuable as your furniture, your car or your home. Still, not assigning beneficiaries to mundane items may end up placing them in a residuary estate.
Assets you acquire later on
People who make a will should revisit it multiple times in the future, especially to account for new properties and wealth. You may have to add a codicil that lists who should receive your new assets. Otherwise, your new acquisitions may become part of your residuary estate if your will does not list who should claim them.
Deceased beneficiaries
It may not be pleasant to think about, but one or more of your heirs might die before you do. In the event you lose a beneficiary from your will, the assets meant for your deceased heir will become part of your residuary estate. Likewise, if you name a beneficiary on a payable-on-death account and the beneficiary dies, the account will probably join your residuary estate.
Consider a residuary clause
There are different options to help you avoid leaving a residuary estate. You might add backup beneficiaries in case one beneficiary dies prior to you. A residuary clause in your will, however, may account for everything in your residuary estate by letting you say in writing that everything left over in your estate will go to one or more beneficiaries.