Most people understand that a person’s estate generally means any assets that they own including property, personal possessions and cash. But you may have come across the term ‘residuary estate‘ if you’re in the process of writing your Will, or if you are an Executor administering a deceased estate. This article explains what a residuary estate means, and how it can be bequested to a beneficiary if you are writing your Will.
What is a residuary estate?
A residuary estate is the remainder of a deceased estate after any gifts have been allocated, as per the Will.
If a Will exists, the Will-maker may have allocated general or specific assets to beneficiaries as gifts. For example, a specific item of jewellery may have been gifted to a granddaughter, or a car to a brother. Financial gifts may also be left to charities of the Will-maker’s choice. These gifts are deducted from the estate before it is divided among the beneficiaries.
After the gifts have been allocated, the remainder of the deceased person’s assets form what is known as the residuary estate. This is what a beneficiary will receive.
The residuary estate also includes any items or assets which the deceased person has purchased, inherited or received since writing their Will, that haven’t been included in the general or specific bequests, or allocated to a beneficiary.
Also forming the residuary estate are any gifts which have been allocated to beneficiaries who predecease the deceased person (or die before the deceased person).
After any debts have been paid, the estate can be distributed to the beneficiaries named in the Will.
How do I nominate beneficiaries of a residuary estate in my Will?
In the first instance, people generally nominate their spouse or a very close family member to receive their residuary estate, as well as an alternate beneficiary in the event they predecease their initial beneficiary. Multiple beneficiaries may also be nominated.
If a Will-maker leaves their estate to more than one beneficiary, they will need to divide the estate into any sized portions they choose, as long as the total bequest equals 100%. For example, two siblings may each be allocated 50% of the residual estate. This can be done in the same way as a general or specific bequest, by including the beneficiary’s full name and address next to the bequest as shown in the below picture. You can nominate beneficiaries of your residual estate, along with the percentage they will receive.
Residuary estate clause example
If you are writing your Will using the Bare Will Kit, you will be prompted to nominate a beneficiary of your estate after any specific gifts have been allocated. However, if you are writing your Will yourself, you may want to add a residuary estate clause. For example:
To Sam Jones, 13 Imaginary Way, Darlinghurst, New South Wales, 2010, I give the residue of my estate not otherwise disposed of by this Will.
Then nominate an alternative beneficiary of your residuary estate in case the first beneficiary predeceases you. You’ll also need to provide identification details as you did for the initial beneficiary.
What happens if I don’t nominate a beneficiary?
If a deceased person fails to nominate a beneficiary of their residuary estate, they will be deemed to have died ‘partially intestate’. This means everything that has been overlooked will be divided according to the formula set by law used for intestacy. Read our article What happens if I die without a will? here for more information on dying intestate.
To avoid this, the common approach is to add in a ‘residuary clause’. Your residuary clause will allocate any overlooked, unclaimed or remaining items or assets of the estate to your chosen person or organisation.
Final thoughts on residuary estates
We hope this article provides a better understanding of bequests and deceased estates, if you are an Executor or writing your Will.
You may also find the following articles useful:
- Complete Guide to Wills
- Estate Administration: 10-step guide to deceased estates
- What is a living will and how to make one?
- Executor of a Will vs Administrator: What’s the difference?
If you require assistance with the Bare Will Kit or with estate administration at any stage, give us a call on 1800 951 897, and we will connect you with Bare’s specialist estate planning partners.
This article is not legal advice. You should chat with your solicitor or accountant for specific advice on your personal or financial situation.
To obtain a Bare Will Kit to write your Will in minutes, visit Bare Wills here. Want to see what our direct cremation service will cost in your area? To get a free quote for a cremation visit the Bare Cremation website or call 1800 951 897.