If you’re new to estate planning or legal terms, the phrase “residuary beneficiary” can be a bit confusing. In its simplest form, a residuary beneficiary is a person or entity that stands to gain any assets left over after all other beneficiaries have been paid. The process of assigning residuary beneficiaries is an important part of estate planning, as it allows you to distribute the remainder of your estate in accordance with your wishes.
What Does It Mean to Be a Residuary Beneficiary?
To better understand the concept of a residuary beneficiary, let’s consider an example. Imagine you are creating a will where you intend to name several beneficiaries who will receive various assets. For example, you wish to give your nephew a car, your daughter a sum of money, and your granddaughter a family heirloom. After all other beneficiaries have been paid, any remaining assets left over in your estate would be distributed according to the instructions of the residuary beneficiary.
How Is a Residuary Beneficiary Different From Other Beneficiaries?
It’s important to understand that residuary beneficiaries are not like other beneficiaries in that they don’t receive any specific assets. Instead, residual beneficiaries simply receive whatever is left over after all the other beneficiaries have been paid. As such, residuary beneficiaries should be named last after all other beneficiaries in an estate plan.
What’s the Benefit of Naming a Residuary Beneficiary?
Naming residuary beneficiaries is an important part of the estate planning process, as it ensures that any assets left unclaimed by the other beneficiaries will be distributed in accordance with your wishes. Furthermore, naming residuary beneficiaries can help prevent disputes among family members or other beneficiaries over who gets what in the event that some part of your estate is not specifically assigned to an individual.