What Does Residue Mean in Probate? | Co-op Legal Services

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What Does Residue Mean in Probate?

11th April 2018

‘Estate’ is the collective term for everything that someone owned on the date that they passed away. The residue of the Estate is what’s left after all liabilities (debts), expenses, gifts and administration fees have been paid.

For free initial advice and guidance call our Probate Advisors on 03306069584 or contact us online and we will help you.

What Happens to the Residue?

If a valid Will has been left by the deceased, this legally binding document outlines how the residue of the Estate passes to the Beneficiaries. This could be left entirely to a surviving spouse, friend, relative, or organisation or it could be split between a number of different people, either in equal or unequal shares, depending on the wishes of the person who made the Will. The residue only includes funds left over after everything else outlined in the Will has been distributed.

If a person dies without a valid Will, this is called dying ‘intestate’. In these circumstances, inheritance laws called the Rules of Intestacy will determine how the residuary Estate is distributed. 

Monetary Gifts

Making a Will is vital to ensure that your wishes are followed after you pass away. It also allows you to distribute specific items and gifts which will be taken out of your Estate before the residuary Estate is distributed. This means that monetary gifts can be more secure than leaving a percentage or fraction of the residue to an individual. Monetary gifts are paid to the Beneficiary after all liabilities, expenses and fees on the Estate have been settled. However, monetary gifts are still distributed to Beneficiaries before the residue is distributed.

Estate liabilities, expenses and fees are only deducted from the residuary Estate, and are not paid out of monetary or specific gifts unless there are no other funds available.

To illustrate how this order of distribution could affect what each Beneficiary receives, see the below examples.

Example 1:

I leave £10,000 to my brother. I leave the residue of my Estate to my wife. 

The Estate value is £15,000, with £3,000 worth of liabilities and expenses. 

In the above circumstances, there is only £12,000 to distribute, and so the brother of the deceased would receive £10,000, and the wife would receive £2,000. 

Example 2:

I leave £10,000 to my brother. I leave the residue of my Estate to my wife. 

The Estate value is £12,000 with £4,000 worth of liabilities and expenses.

The brother would receive £8,000 but the wife would not receive anything from the Estate. 

Specific Gifts

Specific Gifts are also distributed before the residue. This could include a specific bank account which has been left to an individual in the Will. (For example, “I leave my only Barclays bank account to my daughter.”) As the funds within this bank account are a specific gift, they would not form part of the residuary Estate.

It is the Executor’s obligation to ensure that all of the outstanding liabilities, expenses and administration fees have been paid before the residue of the Estate is distributed. This includes all funeral costs, any outstanding monies owed such as a mortgage or credit card debts, and any fees and disbursements incurred during the administration of the Estate. It is only at this stage that the exact value of the residue will be known.

When Can Beneficiaries Expect to Receive the Residue?

Estate administration can be a lengthy process, especially when the Estate contains a property, overseas assets or other significant assets which need to be sold. If all assets of an Estate cannot easily be located then this can also add to the potential delays.

In most Estates containing a property to sell, the Estate administration process will often last around 9 – 12 months, but this can be longer for larger and more complex Estates. The residuary Beneficiaries will receive their inheritance at the very end of this process, after all liabilities have been settled and any monetary or specific gifts have been distributed.

To speak with a Co-op Probate Advisor call 03306069584 or contact us online and we will call you.

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