The terminology residuary is used to define the residue of remnants of estates and trusts. This refers to the property left after distributing gifts specified in the wills and trusts. Assets like personal property or real estate are counted as residuary Of a will or trust if it is not listed for a specific beneficiary. Contact a Ridgeland probate estate administration lawyer for more information.
However, residual trust is not the same as the residuary of a trust. Different types of trust can be considered residuary. In contrast, a residual trust contains the remnants of the property that are not listed to a beneficiary in a will or a trust.
The primary trust, also known as the marital trust, is for the spouse who survived. After that, the secondary or bypass trust is also known as the residual trust. It is for the heirs and listed beneficiaries of the couple. The surviving spouse of the diseased individual is allowed access to the residual trust and withdraws income from it while they’re alive. However, they do not have complete ownership of the trust. After the surviving spouse’s death, the assets held in both trusts are divided among the beneficiaries.
Residual trust – revocable or irrevocable?
Whether a residual trust is revocable or irrevocable is decided based on why the trust was made and its terms and conditions. It is highly situation-specific and subject to changes as per the situation. Bypass trusts turn to irrevocable trust after the first spouse is dead.
Residuary clauses in trusts
Residuary clauses help the trust dictate who is liable to get the residue from the trust. This clause helps determine how the trust assets will be disposed of. The exits not listed under specific beneficiaries are subject to the terms of the residuary clause. The residual beneficiaries can be individuals or charity organizations. Some people also list another trust as residual beneficiaries. The trust grantors can give away money or personal property to their beneficiaries. After the assets are divided among the decided beneficiaries, the remnants will be disposed of as per the conditions of the residuary clause.
Contesting residuary trust
Residuary trusts are subject to legal contest if some parties believe it is unfair. The trust beneficiaries or close relatives who were not included in the trust are allowed to contest the trust.
It is advisable to seek help from a lawyer who can assist you with the process to avoid any mistakes.