People often have financial obligations to outside parties that their estates will need to address after they die. The representative of someone’s estate will pay their credit card balances and handle tax obligations with some of the resources included in the estate. Settling someone’s financial obligations usually occurs before someone’s beneficiaries can inherit anything from their estate.
Oftentimes, testators put careful consideration into the management of their posthumous responsibilities. They also tend to pay close attention to the assets that have the most financial value or emotional significance for them and their selected beneficiaries.
But, people often forget to address a broad assortment of other resources, an oversight that might make their residuary estate a source of conflict. Families often fight over what people don’t address specifically in their estate plans.
What is someone’s residuary estate?
Any resources not specifically included in an estate plan and not used to address someone’s financial responsibility, including taxes and debts, could become part of their residuary estate. Often, personal property, including clothing, household furnishings and similar resources contribute to someone’s residuary estate.
For those with larger estates, the resources not included by name in estate planning paperwork could be worth tens or hundreds of thousands of dollars. Family members and presumptive beneficiaries could very well end up fighting over those resources. Most people would benefit from addressing their residuary estates in their wills and trusts.
Arranging for the sale of assets during estate administration or naming a beneficiary to receive the assets that remain after fulfilling obligations and distributing specific assets to other beneficiaries are both common solutions. Properly addressing all of one’s property is an important step for minimizing the potential for conflict related to estate administration after someone passes.