Residue of a deceased estate, the residuary estate – what is it?

What does the ‘residue’ or ‘to give the residue of my estate’ mean?

 

residue, deceased estate, wills, making a will, administration, probate The residue of a deceased person’s estate is what is left over after the payment of all expenses in connection with the estate.

Expenses include payment of the funeral, costs incurred in the administration of the estate, payment of the deceased’s debts, the discharge of any liabilities of the deceased, and the distribution of any specific gifts made under their will.

The residue or residuary estate is property of the deceased not disposed of by the terms of their will.

Payment of debts

Administration and probate legislation in the states and territories provide that all the assets of a deceased estate are available for the payment of debts, funeral and administration and testamentary expenses where there are sufficient assets in the estate to do so.  That is, the estate is solvent.  In most jurisdictions the statutes set out an order in which to do this; click here for links to the legislation.

Where there are insufficient assets for the payment in full of the debts and liabilities of the deceased, that is the estate is insolvent, the provisions of the  Bankruptcy Act 1966 (Cth) apply, which is Commonwealth legislation.

Gifts of residue in a will

The residue of a deceased may be left in the will to the executor named by the deceased on trust to be distributed according to the terms of the will.

The law distinguishes between specific gifts made under a will from those made out of the residue.  Gifts of all or part of the residue are general in nature.

In practical terms it means that those beneficiaries entitled to a gift out of the residue won’t be able to take it until all the debts and estate matters mentioned above have been finalised as part of the administration of the estate; and the amount of residue ascertained. Depending on the complexity and size of the estate working through this process can take some time.

At the time of making a will what might seem reasonable between beneficiaries receiving specific gifts versus those receiving residue might well be different at the date of death, with the passing of time and the economic impact on asset values.  It is advisable to seek professional financial, accounting and legal advice and update regularly.

Residue and dying intestate (without a will)

The meaning of what constitutes the residue and residuary estate for someone dying intestate is the same.

B Stead
BHS Legal
20 September 2014, last updated 14 April 2018

 



Important notice: This article is intended for general interest and information only. It is not legal advice, nor should it be used as a substitute for legal advice. Always consult a legal practitioner and/or other professional for specialist advice specific to your needs and circumstances, and rely on that.

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