Residuary Estate 101 in Australia: What Happens to “Everything Else” in Your Will

The “residue” of your estate is everything left over in your will after specific gifts and final expenses. This guide explains why that matters and how to plan for it in an Australian will. We’ll cover what a residuary estate is, how to structure it (like percentage splits or contingencies), and what happens if gifts lapse or a beneficiary predeceases you. We also show how LifeVault helps keep it all organised.

What is the residuary estate?

Your residuary estate is the portion of your assets left over after all specific gifts (like “$5,000 to my nephew” or “my car to my sister”) have been distributed and all obligations are settled. In other words, it’s “everything else” that hasn’t been explicitly given to someone in the will.

When you die, your executor first uses your estate to pay for things like your funeral, any outstanding debts, and administration costs. Then, any specific bequests in your will are delivered to the named beneficiaries. Whatever remains after those steps is the residue, which goes to your residuary beneficiary (or beneficiaries) as named in your will:contentReference[oaicite:0]{index=0}:contentReference[oaicite:1]{index=1}.

For example, imagine your will says you leave $10,000 to a friend, your car to your brother, and the residue to your two children. If your estate is worth $200,000 total and you have $20,000 of debts and final expenses, the sequence would be:

• Pay $20,000 for debts/expenses, leaving $180,000.
• Give $10,000 to your friend (specific gift) → leaving $170,000.
• Give the car to your brother (specific gift) → the car is handed over, no cash outlay but its value isn’t in the remaining estate assets anymore.
• The residue is the $170,000 cash (and any other remaining assets) which your children will share according to your will.

If you acquire new assets after writing your will or forgot to mention something, those items also fall into the residuary estate by default:contentReference[oaicite:2]{index=2}. That’s why the residue clause is crucial – it catches any asset not specifically dealt with. Without naming a residuary beneficiary, anything unmentioned would be distributed according to intestacy laws (essentially as if you had no will for that portion):contentReference[oaicite:3]{index=3}. This kind of oversight is common with DIY will kits – people might fill in specific gifts but not state who gets the rest. That leads to partial intestacy, meaning the law decides the leftovers. (See DIY vs Lawyer for when a lawyer’s help is worth it.)

How people commonly structure the residue

Most Australians leave the bulk of their wealth via the residuary estate clause rather than as individual gifts. Common approaches include:

• Percentage splits: Dividing the residue by percentages or fractions (e.g. “50% to my spouse, 50% to my children in equal shares”). This is flexible and ensures the whole residue is allocated 100%.
• Outright vs life interest: Sometimes a spouse might receive a life interest in the residuary estate (access to income or use of assets during their lifetime), with the remainder going to children after the spouse’s death. Alternatively, an outright distribution gives beneficiaries their share immediately.
• Gift-over clauses: Naming alternate plans if the primary residuary beneficiary can’t inherit. For example, “to my spouse, but if they predecease me then to our children.”
• Per stirpes vs per capita: These are fancy Latin terms for how shares might pass if a beneficiary is deceased. Per stirpes (by branch) means a deceased beneficiary’s share goes to their children (your grandchildren). Per capita (by headcount) means the share that would have gone to the deceased person is divided among the surviving beneficiaries at that level.

Tip: You don’t need to list every single asset in your will. A well-drafted residuary clause covers anything not given as a specific gift:contentReference[oaicite:4]{index=4}. (See our guide on listing assets in a will for how to keep track of your assets without overloading your will.) The key is to think about who should get the “rest” of your estate and in what proportions, and to make that clear in your will.

Lapsed gifts, predeceasing, and “gift-over”

A gift in a will “lapses” if the beneficiary dies before the will-maker (and no other provision is made). In plain terms, the gift fails because there's no one alive to receive it. What happens to that gift then? It usually falls into the residuary estate:contentReference[oaicite:5]{index=5}. For example, if you left your car to your brother but he passes away before you, the car would end up as part of your residue (to be distributed among your residuary beneficiaries), unless you named another person to get the car instead.

This is where having alternate beneficiaries or gift-over clauses helps. A gift-over might say “I give my car to my brother, but if he does not survive me, then to my niece.” By planning contingencies, you prevent assets from unintentionally sliding into the residue or, worse, into intestacy.

What if a residuary beneficiary themselves dies before you? Say you left “the rest of my estate to my three friends A, B, and C.” If C dies before you, then unless your will says otherwise, C’s share of the residue will generally go unpaid and fall under intestacy for that portion:contentReference[oaicite:6]{index=6}. Some wills (or state laws) might redirect it to C’s children, but that’s not automatic in all cases. To cover this, you could specify something like “to my three friends in equal shares, and if one has predeceased me, their share goes to the survivor(s) or to their children.”

In summary, a little planning can handle most “what-if” scenarios:

Debts, taxes and costs: what’s paid before residue

Before anyone can inherit, certain expenses must be paid out from the estate. These include:

• Funeral and administration costs: Expenses like your funeral, burial/cremation, and the costs of administering your estate (court fees for probate, executor’s expenses) come off the top.
• Outstanding debts: Any unpaid bills, loans, credit cards, or mortgages are settled by the estate. (If a debt is secured against an asset, like a mortgage on a house you’ve left to someone, your will can specify if that debt should be paid out or if the asset passes subject to the debt.)
• Taxes: Your estate may have to pay a final income tax return, and possibly capital gains tax if assets need to be sold before distribution. Australia doesn’t have an estate “death tax” as such, but tax on things like superannuation death benefits to non-dependants or gains on selling an asset can effectively reduce what beneficiaries get.

All these are generally paid out of the general pool of estate funds – effectively reducing the residuary estate. The executor (the person managing your estate – see Executor Basics) typically uses available cash or sells assets if needed to cover these costs:contentReference[oaicite:7]{index=7}. Specific bequests might be used as a last resort if the residue has insufficient funds (this is known as abatement of gifts). The key point: residue comes last in the order of distributions, so it only gets distributed after all prior obligations are met.

Note: Estate finances can be complex, especially with tax implications, so consider professional advice for large or complicated estates. This information is general and not tax or legal advice.

Co-ordinating residue with non-probate assets

Your will (and its residuary clause) only controls assets that are part of your estate. Some assets – like your superannuation, life insurance payouts, or assets you own jointly with someone – might never become part of the estate at all:contentReference[oaicite:8]{index=8}. These are often called non-probate assets, because they pass outside the will. For example, your super fund might pay your super directly to your spouse via a binding nomination, or a house you own as joint tenants will automatically go to the other owner when you die. Your residuary estate won’t include those assets, since they skip the estate entirely.

Because of this, it’s important to keep your beneficiary nominations (for super, insurance, etc.) in sync with your will. If you intend all your kids to share everything equally, but you’ve only named one child as the super beneficiary, your will’s residue clause can’t fix that imbalance – the super will go directly to that one child regardless. Make sure to review and update things like super nominations after major life changes (marriages, divorces, a beneficiary passing away, etc.) so that they still reflect your wishes:contentReference[oaicite:9]{index=9}:contentReference[oaicite:10]{index=10}.

Avoid contradictions: sometimes people put provisions in their will about super or other outside assets (“I leave my super to X”). Remember, a valid binding nomination will override what the will says. The will’s residuary clause cannot pull in an asset that’s directed elsewhere. To effectively leave your super or insurance via your will, you would typically nominate your estate as the beneficiary on those policies/accounts – but talk to an expert if considering this, because it can have tax and other implications. In general, keep your estate plan documents and account nominations aligned so everything works together smoothly.

It can also help to document your intentions. If you have a complex setup (say, a much larger super payout going to one person and the rest of the estate going to someone else), consider writing a brief explanation or Letter of Wishes to accompany your will. While not legally binding, it can guide your loved ones and reduce misunderstandings.

How LifeVault helps

• Asset register & notes: In LifeVault you can list all your assets and indicate which ones are specifically gifted in your will versus those falling into the residue. This makes it clear to your executor what’s part of the residuary estate.
• Store your Letter of Wishes: You can upload a Letter of Wishes or any notes for your executors, explaining how you’d like personal items or residue handled. This informal guidance lives alongside your will (but only you and your executor can see it when needed).
• Executor tagging: Tag your chosen executor in LifeVault so they can securely access your vault when the time comes. They’ll have a clear overview of your assets – including which ones are outside the estate – and any instructions you’ve left.
• Secure sharing & SensitiveGate: LifeVault’s SensitiveGate feature keeps private details (like account numbers, login info, or personal messages) hidden until they’re needed, even if you’ve shared your vault. You control what your executor or family sees and when. And the system can auto-lock after providing access, to maintain confidentiality.
• Reminders to review: LifeVault can nudge you with gentle reminders to review your plan periodically. If you add significant assets or a beneficiary’s situation changes, it’s a cue to update your will or nominations (and your LifeVault records) so your residue split stays up to date.

Related: Letter of Wishes: what it can and can’t do

FAQs

Does residue include my super?

Usually not. Superannuation is held outside your estate (by the super fund trustee) and is generally distributed according to your super account’s beneficiary nomination, not your will. Unless you explicitly arrange for your super to be paid into your estate, it won’t form part of your residuary estate.

Can I split residue unequally?

Yes. You can leave the residuary estate to multiple beneficiaries in whatever proportions you like – it doesn’t have to be an even split. For example, you might say 60% to one person and 40% to another. It’s your choice, as long as the shares add up to 100% of the residue.

What if a beneficiary dies before me?

If someone named in your will (either for a specific gift or as a residuary beneficiary) dies before you, that gift typically lapses (is void). A lapsed specific gift usually falls into your residue by default. If a residuary beneficiary dies before you and you haven’t named a substitute, their share of the residue may be distributed as if you had no will for that portion (partial intestacy). To avoid that outcome, it’s best to name backup beneficiaries for important gifts and shares of your estate.

Do debts come out of specific gifts or residue?

Generally, debts, taxes and estate expenses are paid out of the estate as a whole before distributions. In practical terms, that often comes out of the residuary funds. Specific gifts (like a particular asset or sum) are usually preserved unless the estate has so many liabilities that the residue is insufficient – only then might specific bequests be reduced to cover the shortfall. So typically, the residue bears the brunt of any debts and costs.

Do I need a lawyer to set residue?

For a simple estate, not necessarily. If your wishes are straightforward (e.g. “everything to my spouse, or if they’ve passed, to my children equally”), you can likely handle that with a standard will kit. But if things are complex – say you have a blended family, want to set up trusts, or have unequal distributions with conditions – it’s wise to consult a lawyer. The residuary clause is crucial, and an estate planning solicitor can draft it to cover all contingencies and minimise confusion.

What if I don’t name a residuary beneficiary?

If you don’t include a residuary clause in your will, any assets left after paying debts and specific gifts will be dealt with under intestacy laws. This means the law decides who gets that remainder (likely your next of kin), which may not be what you wanted. It’s effectively as if you died without a will for that portion of the estate. To prevent this, always name at least one residuary beneficiary (and consider a backup) in your will.