What are future assets and residuary assets and can they be willed?

Estate planning involves the careful consideration of both present and future assets to ensure a smooth transfer of wealth and property. Understanding the concepts of future assets and residuary assets is crucial for anyone drafting a will. This blog delves into what these assets are, and how they can be included in a will under Indian law.

Future Assets

Future assets refer to properties or interests that a person does not currently own (i.e. at the time of making their will) but expects to acquire in the future. These can include:

1. Prospective Inheritance: Assets that a person expects to inherit from someone else.

2. Future Earnings: Potential earnings from investments, businesses, or intellectual property.

3. Acquired Property: Property that a person plans to purchase or acquire through various means.

Can Future Assets be Willed?

Under Indian law, future assets can indeed be included in a will. However, there are some important considerations:

1. Specificity: The will should clearly specify that any and all future assets whether acquired or inherited will be given to the beneficiary(ies) appointed by you in the will. 

2. Legal Ownership: The testator must have a legitimate claim to the future asset. For instance, a prospective inheritance should be something the testator is entitled to under the succession laws governing the estate they expect to inherit from.

Residuary Assets

Residuary assets are the remainder of the estate that is left out from the will. These assets are not specifically named in the will and can include:

1. Unspecified Property: Any property or assets not explicitly mentioned in the will.

2. Unexpected Acquisitions: Assets acquired by the estate after the will was made.

3. Leftover Funds: Remaining money in bank accounts, investments, or other financial instruments after all obligations are met.

Can Residuary Assets be Willed?

Yes, residuary assets can and should be included in a will to ensure comprehensive estate planning. Including a residuary clause in a will provides clarity on how any remaining assets should be distributed. Here are some key points:

1. Residuary Clause: A typical residuary clause might read, "I leave the residue of my estate to [beneficiary’s name]." This clause ensures that all assets not specifically bequeathed are covered.

2. Multiple Beneficiaries: The testator can specify how the residuary assets should be divided among multiple beneficiaries. For example, "I leave the residue of my estate to be divided equally among my children."

3. Fallback Plan: In case the primary residuary beneficiary predeceases the testator or cannot accept the inheritance, the will could include alternate beneficiaries for the residuary estate.

Importance of Including Future and Residuary Assets in a Will

1. Comprehensive Estate Planning: Including future and residuary assets ensures that all potential aspects of the estate are covered, leaving no room for ambiguity or disputes.

2. Flexibility: Future assets clauses provide flexibility for changes in the testator's circumstances, allowing the will to remain relevant even if the testator's assets change over time.

3. Avoiding Intestacy: By covering residuary assets, the testator ensures that no part of their estate is left unallocated, which would otherwise be distributed according to the intestacy laws, potentially against the testator's wishes.

Conclusion

Future and residuary assets are essential components of comprehensive estate planning. Under Indian law, these assets can be included in a will, allowing the testator to account for both anticipated acquisitions and any assets remaining after specific bequests. Clear and precise language is crucial in drafting these provisions to avoid disputes and ensure the testator's wishes are fully honoured. The No Grey platform makes it easy for you to will your future and residuary assets.