What Is A Residuary Estate?
After all explicit donations have been made and all liabilities, levies, administrative expenses, probate charges, and legal expenses have indeed been completed, the Residuary Estate is the property that is left in a deceased person’s estate.
The residuary of your estate is essentially what has left after all specific cash gifts and personal deals are settled. Everything else that has not been given under the terms of your will. Every sort of asset can be expressly stated under an individual’s residual estate aside from Joint assets (e.g. bank account or property) and assets held in trust (e.g. family trust). The reason these assets can not pass under the terms of your will is that legal principles override your will and define where those assets end up. For example, in the case of assets held under a Joint Tenancy, a legal concept is known as ‘Right of Survivorship’ prevails, which states that upon the demise of any sole proprietor, that portion automatically switches to the remaining holder(s) (and outside of the terms of a will).
It’s also possible to establish a residuary estate inadvertently. You could have a residuary estate, for example, because:
1. you neglected to mention something in your will;
2. you have acquired ownership of the goods since you prepared your will;
3. perhaps one of your particular or non-specific contributions failed due to ambiguity.
This implies that naming a beneficiary for your residuary estate. This is even if you don’t think it will be significant, is a smart idea.
Residuary Estate Example
Let’s imagine you had a bank account with $15,000 in it, a $250,000 apartment, and a bunch of other goods.
You specify in your will that you desire to give away certain gifts, such as:
- A donation of $1,500 to a good cause
- A total of $2,000 will be distributed between your two children.
- Your sister gets your guitar.
- For your brother, a painting
- And you decide to leave the rest of your estate to your partner.
There is no inheritance tax owed when you die, but you will be charged $4,000 for your burial and $500 to pay off your credit card debt.
Everything else — $7,000, the flat, and everything you own save the instrument and the artwork – is your residuary estate, which passes to your partner.« Back to Glossary Index