Testators drafting their wills frequently begin the process by identifying their most valuable assets and selecting their intended beneficiaries. People who take control of the estate planning process can choose exactly what their loved ones inherit.
In some cases, the top priority is ensuring that certain beneficiaries inherit specific assets. Other times, testators simply want to ensure that their estate plans are fair and reasonable. They may try to evenly distribute their resources among multiple children or grandchildren.
High-value assets, such as real property, vehicles and financial accounts, are often priority considerations during the estate planning process. Testators may even draft special documents to manage their most valuable assets. Other assets may not receive the same attention. What happens to property not included in a will?
Unallocated assets are the residuary estate
The estate of a recently-deceased person contains all of the property they directly owned. Many of their assets may already have intended beneficiaries, but they may not have planned for smaller resources, such as housewares, collectibles and other personal property.
Those assets not specifically addressed in the estate plan become the residuary estate. The residuary estate could be worth thousands of dollars.
What happens to the residuary estate?
Family members can fight over assets that have perceived economic value or emotional value. Some people try to prevent probate conflicts among their loved ones by designating beneficiaries to receive the residuary estate.
Others might leave instructions for their personal representatives to liquidate the residuary estate at an estate sale. Occasionally, testators do not specifically address the residuary estate in advance. In cases involving a failure to plan for the residuary estate, state law determines what happens next.
Intestate succession laws provide instructions about the distribution of estate resources to specific family members. The personal representative of a Texas estate can follow intestate succession laws to fairly divide the residuary estate among specific people. Typically, surviving spouses, children and other close family members are the ones with the right to inherit property under intestate succession statutes.
Knowing how to address assets not included in an estate plan can help reduce the risk of conflict during estate administration. Personal representatives and those expecting to inherit from an estate may require insight into state law and the probate process. Seeking personalized legal guidance is a good way to get started.