THE LIVING TRUST NETWORK - ABOUT RESIDUARY CLAUSES (POUR-OVER WILLS)

A Testator's residuary estate consists of all property remaining in the estate after all specific and general bequests, and all specific devises, have been made.

The residuary estate (also called the "residue" of the estate) is the primary source of funds to pay the outstanding debts of the Testator; the expenses incurred for the Testator's last illness, funeral services, and burial; and the expenses incurred in the administration and settlement of the Testator's estate, including all estate and inheritance taxes, if any, unless the Testator's Will provides for the apportionment of taxes among all beneficiaries. See Article III of our Specimen Will (entitled "Taxes"), plus the additional information in the pop-up window.

When a revocable living trust is utilized to avoid probate, it is generally funded with most - if not all - of the Testator's property during the Testator's lifetime. In that case, the Testator's Will serves only the limited purpose of insuring that all debts, expenses and taxes are paid and that any excess assets are "poured-over" to the revocable living trust. The revocable living trust is the primary vehicle used to collect and distribute the Testator's property to the intended beneficiaries. In effect, the revocable living trust is used as a "Will substitute."

Because little if any property will pass through a Testator's Will when a revocable living trust is fully funded, there is no reason to make any bequests of money or personal property under the Will, nor is there any reason to make any devises of real property under the Will. Those gifts are made, instead, under the revocable living trust because that is where the property is held.

That being said, you should be aware that estate planning is not always black and white. People use revocable living trusts in many different ways and the drafting of a pour-over Will is dependent upon the objectives behind the revocable living trust and the extent to which the trust is funded during the Testator's lifetime. For example, if a Testator prefers to keep his house in his own name instead of transferring it to his living trust, then he can give the house to his intended beneficiary through his pour-over Will instead of transferring it to his trust and then having the trust distribute it to the beneficiary. In our Specimen Will, we have assumed that almost all of the Testator's property will be in his revocable living trust upon his death, so there is no reason to make any gifts from the pour-over Will.

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