The Residue Of The Estate
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A testator may direct specific gifts, known as bequests, to certain surviving friends and family, and then leave the remainder of his or her estate to a surviving spouse or child. This remainder, known as the “residue”, typically includes items like the house or a car.
However, the rest of the estate may be used to pay off debts, taxes and other outstanding expenses. Which could mean the beneficiary of the residue may be left with nothing. So how do you protect yourself if you are the beneficiary of the remainder of an estate?
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If you have concerns about how an estate is being distributed, you may have rights to bring the matter to court. An estate lawyer will identify the strength of your case, how the law applies, and the best options available to pursue your position on the matter.
How The Residue Is Used
If there are outstanding payments, collectors would be paid out of the residue first. While bank accounts and other investments are the primary source of payments, personal property – like a house or car – could be used to pay off outstanding debts as well. This means a surviving spouse could lose his or her house if it is included in the residue of the estate.
Potential Protection
According to Estate Law Canada, a site dedicated to information regarding wills and estates, there are some instructions you can consider that could help beneficiaries avoid losing out on residual inheritance.
For example, a testator could specifically leave his or her house to a surviving spouse or child. If property needs to be sold to settle debts, these specific gifts would be used as assets last. A house may still be used to settle outstanding debts, but this way it may be used after all other sources are depleted.
There are no guarantees to property if an estate does not have enough funds to pay off outstanding debts. But specific instructions regarding the residue may reserve some of the personal property for a period if it ever comes to that.
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