Legal Definitions - true residue

True Residue refers to the net portion of a deceased person's estate that remains after all specific gifts (legacies or devises), debts, taxes, funeral expenses, and administrative costs have been paid. It represents the final amount available for distribution to the residuary beneficiaries, who are designated to receive "the rest" or "the remainder" of the estate.

Think of it as the ultimate leftover sum once all obligations and specific bequests have been satisfied. It is sometimes also referred to as "clear residue" to emphasize that all deductions have been made.

• Example 1: A Simple Will

  Eleanor's will states: "I give $10,000 to my niece, Sarah. I give my antique watch to my nephew, David. The true residue of my estate I give to the local animal shelter." When Eleanor passes away, her estate has $200,000 in assets. After paying her outstanding credit card debt of $5,000, funeral expenses of $7,000, and legal fees of $8,000, and distributing the $10,000 cash gift to Sarah and the watch to David, the remaining amount is calculated. The initial $200,000 minus $5,000 (debt) minus $7,000 (funeral) minus $8,000 (legal fees) minus $10,000 (gift to Sarah) leaves $170,000. This $170,000 is the true residue that will be given to the animal shelter.

  This example illustrates how specific cash gifts, debts, and administrative costs are subtracted from the total estate value to arrive at the net amount designated as the true residue for the final beneficiary.

• Example 2: Estate with Property and Liabilities

  Mr. Henderson's estate includes a house valued at $500,000, investments worth $200,000, and a car worth $20,000. His will specifies that his sister receives $50,000 and his best friend receives the car. The will states that the true residue of his estate goes to his children. Before distribution, the estate must pay off a mortgage of $100,000 on the house, outstanding income taxes of $30,000, and estate administration fees totaling $20,000. The house is sold, and all debts and expenses are paid. After the $50,000 cash gift to his sister and the car to his friend, the remaining cash from the house sale and the investments, totaling $520,000 ($500k + $200k - $100k - $30k - $20k - $50k - $20k for car value already given), constitutes the true residue that will be divided among his children.

  This example demonstrates that the true residue accounts for the sale of assets, repayment of significant liabilities like mortgages and taxes, and the distribution of specific non-cash items, before the final net amount is determined for the residuary beneficiaries.