How Your Plans Can Be Sabotaged by Partial Intestacy from Residuary Estate

As with anyone who strives to give their loved ones the very best, we all write Wills to leave clear instructions for the distribution of our possessions and to minimize conflicts after our eventual departure from earth.

Nevertheless, did you know that even after a person leaves a Will, it is possible (and even common!) that foreseeable situations, which the person thought they had planned for in the Will, might cause terrible family conflicts?

Now that you know, let us explain how such situations arise. The most frequently occurring of them are the cases of Partial Intestacy resulting from Residuary Estate.

The million Dollar question: What exactly is ‘Residuary Estate’?

Story time!

In the judicial matter of SALUBI v. NWARIAKU, the Nigerian Supreme Court defined Residuary Estate as ‘including the entire portion of the estate of the deceased that remains after the distribution of bequests and settlement of liabilities’.

As usual, we can explain.

In practice, the administration of an estate might not be as simple as following the instructions of the deceased as they were written. This happens sometimes because the deceased had leftover property (known as residuary assets of estate) even after distributing other assets in their Will to intended beneficiaries. Such property can come about in any of several ways.

1. Insufficient Inventory of AssetsDifficult as this might be to imagine, some asset owners own so much property that they are unable to maintain a proper inventory of everything. Try to think of all that you own, and notice how easy it is to forget that your book collection also needs a home when you are gone. Similarly, when making Wills and distributing assets, owners may omit those assets which they do not remember possessing. In such a situation, those omitted assets will form part of the residuary estate and will not be administered under the Testator’s Will.
2. Acquisition of Property after writing the WillSometimes, Testators acquire new assets after they have written their Will and fail to update the document or to add a codicil covering the new assets. In such situations, it is impossible to include these assets in the administration of the Will upon demise of the Testator, since they were not included in the Will. Such post-acquired property will automatically be part of the Testator’s residuary estate.
3. Judgment CreditAnyone could experience legal suits in court while alive. It is also possible for a deceased person to be involved in a legal suit brought by their Executors concerning a trespass upon the Testator’s landed assets or for any other reason. Where the court awards a judgment credit in favor of a deceased person, such monetary assets will form part of residuary estate since the deceased Testator could not possibly have accounted for these assets in a Will.
4. Death of BeneficiarySometimes, a particular beneficiary may pre-decease the Testator, who in turn may forget to amend a Will by bequeathing the gift intended for the deceased beneficiary to someone else. This creates a situation where the gift or bequest given to that late beneficiary will ‘fail’ when the Testator eventually passes, since there’s no one to receive it. In such a situation, the gift given to that late beneficiary will also form part of the residuary estate of the Testator.

PARTIAL INTESTACY: What happens to one’s Residuary Estate?

Where a Testator does not expressly provide for assets that constitute residuary estate, this may constitute a problem of partial intestacy.

Partial Intestacy covers situations in which a Testator made provision for some assets in their Will, but failed to make provision for other assets. The assets provided for will be administered per instructions in the Will, while the beneficiaries of the Testator will have to go through the rigor of obtaining Letters of Administration before they can access and administer the assets that the Testator did not include in the Will.

Such partially intestate assets may create bitter family feuds, defeating the Testator’s purpose of having created a Will to prevent conflict in the first place. In the end, the position of a Testator who made a Will covering only part of their assets is not substantially different from a Testator who made no will at all, in the area of uncovered assets.

RESIDUARY CLAUSE: A way out!

The problem of partial intestacy can be solved by inserting a residuary clause in the Will, which provides for how and to whom any asset forming part of the Testator’s residuary estate should be distributed.

It must however be noted that a residuary clause must be well drafted by a Will writing expert for it to be valid. In the judicial matter of HOLCOMB v. NEWTON, a Testator included language introducing a residuary clause but failed to mention beneficiaries of the residuary estate in the residuary clause. The residuary estate was unfortunately therefore subjected to partial intestacy rules.

Likewise, in the judicial matter of BOWMAN v. BROWN, the Testator included a residuary clause leaving the estate to his wife for life but did not mention what he wanted to become of the remainder upon his wife’s death. The court held that upon the demise of his wife, the residuary estate would be subject to the rules of partial intestacy.

A properly couched residuary clause saves a Testator from having their residuary estate subjected to the rules of partial intestacy, and prevents consequent familial conflicts that could sour a glorious exit. It is therefore important that anyone intending to write a Will consult a Will writing professional. In the same vein, a person who has written a Will but is unsure of the standing can also consult a Will writing professional for vetting and where necessary, for making necessary amendments.

Do you want to avoid the evils of partial intestacy?

Visit https://utltrustees.com today to contact a Will writing professional!

 

NB: For more details on creating a Blind Trust, visit UTL Trust Management Services Limited here .