Recently, a client asked me to review the will of their elderly friend and I was reminded yet again how important it is to have your estate planning documents reviewed and updated regularly by an attorney who focuses their practice on estate planning matters.
The elderly friend, let’s call her Helen, had always been very conscientious about her financial affairs and now that she was in her 90s, had amassed a healthy estate to leave as her legacy. When it came time to draft her will, however, she did not seek out the advice of an estate planning attorney but instead had a long-time acquaintance who practiced in another area of law draft her will for her. Helen and her lawyer friend had gone to high school together back in the day and he was of course a very trustworthy and upstanding individual. Despite all this, one look at Helen’s will told me that her estate plan was in serious jeopardy.
While Helen’s will listed all of her major property and whom she wanted to leave it to, one minor yet vital piece of the puzzle was missing: the residuary clause. Most people have never heard of a residuary clause, but any estate planning attorney will tell you that it is one of the most basic essentials that any Massachusetts will needs to have. The residuary clause is what we refer to as a failsafe clause—it protects your estate plan in case someone in your will is either unable or unwilling to accept the inheritance left to them.
For example, let’s say your will leaves some property to Cousin Joe. What happens if Cousin Joe passes away before you do? Without a residuary clause this gift will “fail” meaning that there is no one listed in your estate plan who can take ownership of the property you left to Joe. The danger is that without proper planning, this property will now revert back to your estate and have to be distributed according to the Massachusetts laws of intestacy as if you had no will at all. This can have disastrous consequences if, for example, your next of kin according to the intestacy laws is a parent or a disabled sibling who is receiving public benefits like MassHealth. The unintended inheritance may actually disqualify them from receiving benefits. In other instances, someone may end up with your property without your approval.
With a residuary clause, however, Cousin Joe’s failed gift would go back into your estate as part of your “residue,” i.e. everything in your estate that has not been expressly disposed of in your will. You can then designate a person or group of people who will share the assets in your residue, should there be any. This is important for any will, but especially if you are leaving property to older friends and relatives. Not having a failsafe provision in case a gift lapses can be fatal to your estate plan.
I generally recommend that families review their estate planning documents, including their will, with a Massachusetts estate planning attorney at least every five years. Just as important is having someone who practices in estate planning draft you will. Even if your best buddy is a lawyer, a detailed knowledge of estate planning can help you avoid costly mistakes down the line.