What Is a Residuary Clause?

A will might leave a ring to a niece, a cash gift to a friend, and everything remaining to two children. The provision dealing with that remaining property is commonly called the residuary clause.

It can look like a final catchall paragraph, but it deserves close attention. An asset acquired years after the will was signed may end up being governed by that provision rather than by any individually named gift.

The residue can be the largest part

Suppose a person writes a will while most savings are in a single account. Years later, they sell a property and place the proceeds in another account. A will that lists only selected gifts may say little about the new funds unless it also contains an effective provision for the remainder.

That is one reason an estate plan should be tested against property changes. The question is not whether every new account number appears in the document. It is whether the document’s broader provisions produce the intended result for property within its reach.

Failed gifts can bring the clause into play

Iowa Code section 633.273A addresses failed devises. Subject to contrary intent in the will and the antilapse statute, a failed nonresiduary gift becomes part of the residuary estate. It also addresses a failed share where the residue was left to multiple people.

The interaction matters. A family should not decide where an unsuccessful gift goes by reading that gift alone. The residue, alternate language, and applicable statutory rules may need to be considered together.

Leaving someone half the residue does not promise half the value of every asset shown on a planning spreadsheet. The estate must account for the obligations and dispositions that affect what remains. Section 633.436 also addresses the reduction of gifts when abatement is required.

When reviewing a draft, ask who receives the residue, what happens if that person dies first, and whether the answer still works after a major change in property. Read any alternate provisions as carefully as the first name.

The clause can be short while doing a great deal of work. Understanding it helps someone see the plan beyond the familiar list of personal gifts at the beginning of the will.

Tyler ThompsonAuthor