The Critical Importance of a Residue Clause in Your Ontario Will

What is a Residue Clause?

A residue clause (also called a residuary clause) is a vital provision in your will that specifies who will receive any remaining assets that aren’t explicitly addressed elsewhere in your will. It acts as a catch-all to ensure that all unallocated or newly acquired assets are distributed according to your wishes. This provision typically contains language referring to “the rest, residue and remainder” of your estate.

Why Your Ontario Will Needs a Residue Clause

1. It Prevents Partial Intestacy

Without a residue clause, any undistributed assets in your estate would put your estate into partial intestacy. This means Ontario’s Succession Law Reform Act would come into play, and a probate court would decide what to do with your remaining assets. Essentially, the law would determine who gets these assets rather than you, potentially directing them to beneficiaries you never intended.

2. It Captures Assets You Acquire After Creating Your Will

Financial assets and personal belongings change over time. You might sell a condo and buy a house, acquire new investments, or inherit property after drafting your will. A residue clause ensures these new assets are automatically included in your estate plan without requiring constant updates to your will.

3. It Handles Lapsed Gifts

A residue clause addresses what happens if a beneficiary who was to receive a specific gift does not survive to inherit, or refuses to accept the gift (disclaims), and there is no other alternative beneficiary named. Without this provision, these assets might pass to unintended parties or distant relatives.

4. It Simplifies Estate Administration

For your estate executor, a clear residue clause provides straightforward instructions on how to distribute any assets not specifically mentioned, simplifying their job and reducing the administrative burden during an already difficult time.

5. It Prevents Family Disputes

By clearly stating who receives any remaining assets, a residue clause helps prevent potential conflicts among family members who might otherwise assume they should inherit certain items.

What Happens Without a Residue Clause?

If you die without a properly structured will or without a residue clause, your estate falls under intestacy laws, which means your assets will be divided only among your closest kin according to strict laws. Any additional wishes or beneficiaries you intended to include won’t be considered.

Incorporating a well-structured residuary clause in your will is essential for comprehensive estate planning. It not only safeguards your remaining assets but also provides clarity and peace of mind for both you and your heirs. While it’s possible to create a will on your own, consulting with an estate planning professional in Ontario is highly recommended to ensure your will, including the residue clause, is properly drafted to meet your specific needs and comply with Ontario law.

Don’t leave the distribution of your hard-earned assets to chance or to the courts. Make sure your will includes a properly drafted residue clause that clearly expresses your wishes for all of your estate.  Reach out to Peter if you have any questions.

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Ministry of the Attorney General Information on Estates, Wills and Trusts