Individuals have a tendency to put off or delay their estate planning process for various reasons. Some people feel it is too costly or time consuming, while others have trouble deciding to whom they want to leave their assets. Once you have decided how and to whom you want to leave your assets, it is important you have the correct estate planning documents in place to carry out your wishes
By creating a trust, and integrating it with your estate planning and beneficiary designations you make it more likely that all of your assets will be distributed as you wish. Many trusts have a series of specific gifts. But you should be sure that your trust also contains a residuary clause. A residual clause states what happens to assets that were not given away by a trust. Once distributions have been made to heirs, taxes have been filed, and any other debts have been settled, the money that remains will be covered by the residual clause. Many times individuals use the residual clause to gift money or assets to immediate family, extended family, and charitable organizations. Lastly, by including a residuary clause you are eliminating any potential problems with any beneficiaries listed within your trust.
For example, if a beneficiary passes away before you do the money or assets intended for that beneficiary will be added back to your trusts “residue” and be covered and distributed by the residuary clause.
If your trust does not include a residuary clause your assets may not be distributed as you had originally intended or wished. Your assets might be distributed according to intestate laws. This means that any remaining assets would be disposed of by probate court. Probate court actions can be an expensive, time consuming, and frustrating. Therefore, it is important to include a residuary clause in your trust to avoid confusion and expense.
To make sure that your trust is up to date and contains the most important clauses, which protect your assets and heirs, please contact David M. Frees, III at 888-573-7407 or [email protected].