Understanding Legal Terms: Residuary Estate In A Will

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Home > Blog > Understanding Legal Terms: Residuary Estate In A Will

The term ‘residuary estate’ refers to the remainder of an estate after all specific bequests, debts, taxes and other obligations have been met. It is dealt with under a specific residuary estate clause in a will.

If any assets are not accounted for in a will or the deceased did not have time to add new assets to their will, the residuary estate ensures that these are dealt with appropriately.

The residuary estate is often overlooked, but it is a vital part of estate planning.

Who needs a residuary estate clause in their will?

Anyone who has a will can have a residuary estate clause included in it. The size of the estate has no bearing on whether or not a will should also include a residuary estate clause. In fact, if a person does not have a residuary estate clause, their will could risk partial intestacy (meaning the deceased died without having a will or, in this context, only having a will to deal with part of their estate).

What are the benefits of a residuary estate clause?

One of the most important benefits of including a residuary estate clause in a will is the clarity it can provide, which can ultimately help beneficiaries avoid disputes. If there are ambiguities in the will and a history of complex family dynamics then precise wishes left in a will can assist in overcoming doubt or misconceptions about how certain assets should be distributed.

A residuary estate clause can also simplify a will, by dealing with assets in a way which allows a certain property to go to one person and the remainder of the estate going to another. By the same token, because the residuary estate is essentially a catch-all for the assets in an estate that have not been specifically mentioned or itemised in the will, any asset forming part of the estate which has been acquired since the will was drafted can become part of the residuary estate.

With this in mind, the owner of the will should be certain that the beneficiary or beneficiaries of the residuary estate is a person/are people whom they would want to inherit any assets comprising the residuary estate. To this end, it is important that a will is prepared by an experienced estate planning lawyer who can ensure the will is drafted clearly.

An additional benefit of the residuary estate is that if a specific beneficiary is named in a will but that beneficiary passes away before the will can be updated, the assets which were intended to be bequeathed to the deceased beneficiary will become part of the residuary estate.

Who can be the beneficiary of a residuary estate?

Typically, a person’s spouse or other family members will be nominated as the beneficiary to receive any of the assets which remain in the residuary estate, although these assets can be distributed to any person the will-maker chooses.

If there is no beneficiary named in the residuary estate, the assets will be distributed in accordance with the rules of intestacy. This means the residuary estate would be handled in the same way as if the deceased had died without leaving a will.

The most effective way to ensure that your final wishes are honoured is to have a will prepared by a lawyer who is experienced in estate planning and can listen to your unique situation and assist you accordingly. If you do not currently have a will or you would like to update your existing will, our wills and estate lawyers in Cairns can assist. Contact us today for a fixed fee quote.