What is a residuary estate?
The residuary estate is everything left after debts, taxes, funeral costs, administration expenses and specific gifts have been paid. Whoever inherits it — the residuary beneficiary — absorbs the effect of any shortfall, growth or unexpected liability in the estate.
This is the part of a will that actually determines who gets the bulk of the wealth. Specific gifts are paid first and in full; the residue takes whatever remains. If the estate turns out smaller than expected, it is the residuary beneficiary who bears it.
The reverse also applies. Where an estate grows between drafting and death, the residuary beneficiary captures all of that growth, which can quietly unbalance an intended split.
A will that fails to name a residuary beneficiary, or where the named one dies first with no substitute, creates a partial intestacy over that share.