Getting your legal affairs in order can save your family a lot of headaches. Unfortunately, when creating a will, many people get confused about the terminology. The situation can get particularly complicated if you have a large estate or want to designate multiple beneficiaries. There are several types of beneficiaries, and determining the best options for your will can get confusing. To help you understand the terminology, we’ll explain what is a residuary beneficiary and how your estate gets divided.
Residuary Beneficiary vs Specific Gifts
Before we talk about beneficiaries, we first need to cover some basics regarding wills and trusts. If you want to determine who gets your property when you pass away, you must create a will. One of the first steps in outlining your will is selecting your primary and alternate beneficiaries. As the name states, a beneficiary is someone who stands to inherit a part of your estate after your passing.
You can decide to dedicate (bequest) specific gifts or sums of money to individual beneficiaries or organizations. This type of beneficiary is called a non-residuary beneficiary. Specific gifts are common in wills regarding jewelry, property or family heirlooms or any specific asset you want someone to inherit. However, you may also choose not to name inheritors for specific gifts. In that case, you can leave everything to a residuary beneficiary.
A residuary beneficiary is sometimes also called a primary beneficiary. The person, persons, or organization you name as residuary beneficiaries can receive all or part of your estate. Of course, they won’t receive any specific gifts you have intended for others. If you have carefully detailed, who gets what, there is no fear of mix-ups. Residuary beneficiaries will receive all of your property that you didn’t give to someone else. They can receive the property you didn’t name to someone specifically and the property that no one survived to inherit.
The Benefits of Naming Someone a Residuary Beneficiary
A majority of people name a child, relative, friend or charity as a residuary beneficiary. Yet there is another option. You can dedicate most of your property as specific gifts. Since the residuary beneficiary gets the property others haven’t been named in ‘specific gifts’. Doing this ensures that whatever is not named as a ‘specific gift’, ends up going to those you choose. If no one is named as a residuary beneficiary, then the courts will need to decide who receives the balance of your assets not specifically named.
There is also the option of naming someone a contingent beneficiary. You can consider this person to be an alternate residuary beneficiary. A backup can be useful if your intended beneficiary is unable to accept your property. They will inherit your estate if your residuary beneficiaries decease before you pass.
What if You are Someone’s Residuary Beneficiary?
When someone passes, their will goes into a probate process. This represents the legal process of proving a will valid. You can hire a probate lawyer to make this process easier and faster. However, it would be best if you remembered that it could take a very long time before you receive anything. Even after the will has been read, it may even take up to a year.
Unfortunately, the person executing the will doesn’t even have to consult with you or update you on the process. This can lead to confusion, and sometimes even legal disputes can occur. If someone does file for a dispute, you can expect the process to take even longer.
However, if you feel the executor of the will is not moving the case forward, you can take legal action. Even threatening to take them to court should get your case moving. Nonetheless, we recommend being realistic with your expectations.
How to Name a Residuary Beneficiary
If you want to create a will, you should take your time and carefully plan everything out. We have created a handy checklist for creating a last will that you can use. By going through our checklist, you’ll ensure that you don’t forget anything important.
You can name beneficiaries as part of your will. This is a much better option than letting the court decide what happens to your estate. However, to be safe that there is no confusion, you should be very specific when naming your beneficiaries. Use their full names and explain their relation to you. If you name more than one residuary beneficiary, then you should be prepared to specify what shares you want each to receive.
Remember that if you designate someone to inherit your entire estate – you won’t be naming a residuary beneficiary. This is because a residuary beneficiary only receives the items not dedicated to other beneficiaries. However, residuary beneficiaries may receive assets you did not assign, or forgot to name in your will.
Always name a residuary beneficiary. Unless you want your family to deal with probate court’s red tape, and you’re okay with strangers giving away your assets.
By now, you should have a better understanding of what is a residuary beneficiary. Naming the inheritors in your will is a critical task that you shouldn’t take lightly. When determining the residuary beneficiary, you should consider all the points discussed here.
You should remember that registration of a will is an essential step when planning your estate. Registering your will ensures that your beneficiaries will find it and receive what you intended.
What Happens to Your Will if You Move States
If you plan to move to a different state, it’s natural to wonder what happens to your will and if there are changes that need to be made in order for your will be admissible. Although there are specific differences between state laws, your will is still a valid legal document. To be safe, you should look at the state laws relating to your will. The expected differences in state law regarding wills include:
- Who can be your witnesses
- Disinheritance of children
- A change in tax domicile
- Updates after new marriages or divorces
- Changes in shared property law between states
However, there are things you must change when moving to a new state. These include your driver’s license, automobile plates, and other IDs. There’s a lot to take care of when moving to another state, and you’ll also need to handle the move. When searching for a moving company, you should explore various experts to find professionals you want to work with. Hopefully, you will be able to resolve your legal matters quickly and get settled into your new home.