What is the importance and function of residuary clause in a will or other testamentary instrument?

Answer 1

There's an old saying about real estate: "the fee must always be someplace", meaning there must always be an identifiable owner.

A residuary clause is something like a "default" clause that if NOBODY else is to inherit property, it still goes SOMEPLACE.

In a will or any testamentary instrument, if the person making the will ("testator") or other instrument ("grantor" of a trust or other such instrument) dies and all the people who were supposed to inherit have already died, have no children of their own and the instrument is otherwise defective because it doesn't "shift" inheritances to other living people through a "per stirpes" or similar designation and there are no other heirs at law (parents, grandparents, siblings, etc.) and the will does not have a "residuary" clause saying who gets the estate almost like a "default" inheritor (it could be a charity and even if the specific charity no longer exists then a court could appoint an alternate charity), then it is possible the estate will "escheat" or default to the STATE and be lost forever!

AnswerA residuary clause is important because it controls the distribution of the residuary estate.

A person's residuary estate is any property remaining after all debts, taxes, expenses, and specific bequests and devises have been fully satisfied. It may consist of property the testator owned and didn't devise under the provisions of the will, property that comes into the estate after the death of the testator such as insurance proceeds, refunds, court settlements, assets the testator forgot to include in the distribution, legacies that have lapsed or assets the testator may have acquired afterexecuting the will. It is a catch-all category that may include a considerable amount of property in many cases.

The residuary clause is important because it directs how the residuary estate will be distributed. If there is no residuary clause included in the will the residuary estate will pass to all the heirs at law as intestate property according to the state laws of intestacy as if there was no will.