Glossary · UK
What is Residuary Estate?
The part of a deceased person's estate left over after debts, taxes, expenses and specific gifts have all been paid.
Full Definition
The residuary estate is what remains of a deceased person's assets once all liabilities and prior claims have been met. Executors first gather the assets, then pay funeral costs, outstanding debts, administration expenses, any Inheritance Tax due, and all specific gifts (such as a named item) and pecuniary legacies (fixed cash sums). Whatever is left forms the residue, which passes to the residuary beneficiaries under the will, or under the intestacy rules if there is no valid will. Drafting a will to dispose of the residue is important: gifts that fail or assets not specifically mentioned fall into the residue, so a residuary clause acts as a catch-all. The size of the residue is affected by the 40% Inheritance Tax charge (reduced to 36% where at least 10% of the net estate passes to charity), the GBP 325,000 nil-rate band and the GBP 175,000 residence nil-rate band where available.