For most people, the bulk of their estate eventually becomes their residuary estate, this is the residue after all their debts have been paid and all the specific gifts in their will have been given out by their Executor.
So, the Executors have to obtain Probate, make sure that the deceased’s debts have all been paid, then give out any gifts that they’ve been instructed to do by the deceased, the gifts may be actual items or cash gifts to individuals, groups or charities etc. then, the Executors are left with various assets that could be made up of things like a house, Premium Bonds, shares, bank accounts etc.
This is the Residuary Estate and needs to be turned into cash so items are sold, policies/shares are cashed in and eventually the Executors have a single pot of money that they distribute in accordance with the deceased’s will.
The Residuary Estate in your will is usually dealt with in percentage terms, e.g. 50% to daughter, 50% to son and so on. This is done as, when you write your will, it’s impossible to know how much you’re going to have when you die, so, by using percentages, it doesn’t matter whether you have a million pounds or just a hundred pounds, your residuary estate can still be distributed in the percentages specified in your will.
A common thought in people’s minds is that they can specify what items or bank accounts go to people and they no longer need to specify who gets their residuary estate and in what percentages. This is not the case, even if you think you have covered everything there is always something that you’ve missed, perhaps a refund that occurs into your estate after your death etc. that’s the sort of thing that is swept up in residue and dealt with in this way.
As always, if you have any queries about this topic, please feel free to call me to discuss them or you can ask questions about residuary estate via the online form on the Contact us page or the home page of this website.