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A residuary beneficiary is an individual or entity which inherits the assets of en estate that are not specifically designated for other beneficiaries. The idea is that any holdings or belongings associated with the estate that are not named in a last will and testament and left to someone in particular are considered to be part of the residual estate and will be awarded to this type of beneficiary. This approach is not uncommon in many cultures, with the terms of a will designating certain assets and belongings for certain people, with the remainder of the estate going to a single entity.
One of the easiest ways to understand the concept of a residuary beneficiary is to consider a will in which several beneficiaries are identified. The will may specify that the book collection of the deceased should be given to a close friend, while another friend or relation is provided with a gift of a specific amount of cash from the estate. From there, the home and all its contents may be left to a spouse or partner. Finally, a provision may exist allowing that all remaining property and assets be left to one particular individual, who is considered the residuary beneficiary.
Identification of a residuary beneficiary is very common in a number of cultures. Rather than include an exhaustive listing of all assets in the possession of the deceased at the time of death, the terms of the last will and testament will bequeath specific items to certain people, but then leave the remaining assets to that lone beneficiary. The understanding is that all assets not specifically bequeathed to someone in particular are considered part of the residual estate and will be awarded to the person identified as the residuary beneficiary.
The actual scope of assets that the residuary beneficiary eventually inherits may be subject to the necessity of the executor having to settle any outstanding debts owed by the estate. Typically, executors are empowered to sell assets if necessary in order to settle the debts, which may reduce the range of residual assets that are eventually passed on to the beneficiary. The benefit of this approach is that the remaining assets do not come with any type of lien or obligation, allowing the recipient to make use of the assets in any way he or she sees fit, after settling any type of inheritance or other taxes that may apply to the acquisition of the assets.
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