A residuary estate is a legal term that refers to all property of a deceased person not specifically bequeathed to an heir under a will or other estate planning document. Basically, the residuary estate is any property that was not separately identified in the estate planning document.
Specific and General Bequests
A bequest, or bequeathal, is a gift made under an estate planning document, such as a last will and testament. A bequest can be as specific as "I give my wedding ring to my oldest daughter" or as general as "I give all my physical possessions to my oldest daughter."
When a person passes away, all of that person's property must be compiled, catalogued and distributed to a surviving heir or heirs. In most cases, this legal process called probate occurs under the supervision of a probate court judge. All of the deceased person's property owned at the time of death is referred to as the deceased person's estate.
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The first thing that happens in probate is that any estate property mentioned in a specific bequest gets transferred out of the estate and to the rightful heir. After all bequeathed property has been distributed, the remaining property in the estate is referred to as the residuary estate. The residuary estate is essentially the leftover property after all specifically-identified property has been given out of the estate.
Most wills provide a general bequest clause relating to the residuary estate. For example, the will may provide that "I give my residuary estate to my surviving spouse." Often, a will works in tandem with a living trust, which is a separate legal estate planning document. Some wills direct the residuary estate to be transferred over to the living trust. The living trust then contains specific instructions regarding how, when and to whom the trust property should be transferred to one or more heirs.