What is a residuary clause?

Senior couple meeting with legal advisorResiduary clauses are one of the most important elements in a will. Jennifer Russell of Wright Hassall, outlines the features of an effective residuary clause.

A residuary clause in a will sets out who will inherit the remainder of the deceased’s assets once any debts, funeral expenses, inheritance tax and legacies have been paid, and any items specifically bequeathed have been distributed to the appropriate beneficiaries.

The residuary clause is arguably the most important clause in the will, and some simple wills may only have a single clause setting out the residuary beneficiary or beneficiaries.

If no executors have been appointed by the will, or none are able to act, then the residuary beneficiaries can prove the will. In this case, rather than a ‘grant of probate’, they would be entitled to a ‘grant of letters of administration with the will annexed’.

An effective residuary clause avoids assets passing under the rules of intestacy, potentially to any family members who are not of the deceased’s choosing; alternatively, if there are no family members, then the assets would pass to the Crown, which many people might also wish to avoid.

Different types of residuary clause

Family inheritance

Residuary clauses can be drafted very simply. They might name one or more individuals who will receive assets outright, either in equal or unequal shares. Further provisions can be included to stipulate that the beneficiaries must reach a specific age, such as 21 or 25, before they can inherit.

Default provisions can also be added, for example, specifying that if a beneficiary dies, their children will inherit in their place. Commonly, a residuary clause may be drafted to leave the residue to the surviving spouse or partner on the first death, with assets passing to children on the second death, perhaps with substitutionary provisions in favour of grandchildren in the event a child predeceases the person making the will (testator).

Charity provisions

The residuary estate can also be left to charities. However, where the residue is divided between beneficiaries who qualify for inheritance tax exemptions, such as spouses and charities, and those who do not, careful thought must be given when drafting the will as to where the burden of any inheritance tax should lie.


More complex residuary clauses can be drafted to leave assets on the terms of a trust. Trusts can be useful where you wish to incorporate flexibility, provide a degree of control and offer protection. For example, it may not always be prudent or legally or practically possible for certain intended recipients to receive a large sum outright. In cases where a person is young, lacks mental capacity or suffers from an addiction, trusts can provide valuable protection, allowing the trustees to manage the funds on their behalf.

Discretionary trusts

If the residue is left on the terms of a discretionary trust, the trustees have flexibility to decide which beneficiaries from a specified group chosen by the testator should benefit from the assets, and to what extent. This can allow them to take beneficiaries’ changing circumstances into account when making distributions, which may be different from those in existence when the will was made. For instance, larger distributions could be made to beneficiaries with greater need if the trustees felt that this was appropriate. In certain circumstances, trusts may offer protection in the event of a beneficiary’s divorce or bankruptcy. 

This flexibility can also allow the trustees to carry out tax-efficient planning, including taking into consideration more recent account tax rules, which may differ from those in existence when the will was drafted, such as to ensure that reliefs and exemptions are maximised. A discretionary trust can also be reorganised after death to ‘capture’ the benefit of the testator’s inheritance tax nil rate band.

This avoids, in the case of an unmarried couple, the same assets being taxed on both deaths and, where a person has been widowed more than once, potentially allowing their estate to benefit from more than two inheritance tax nil rate bands, as would usually be the case under the transferable nil rate band rules. 

Life interest trusts

With a life interest trust, named beneficiaries have the right to receive the income from the trust fund, which includes the right to occupy any residential property rent-free, and receive income from any investments in the residuary estate during their lifetime, after which the capital passes to other named beneficiaries or into a discretionary trust. This can be particularly useful for those wishing to benefit their spouse during their spouse’s lifetime, whilst also ensuring that their children ultimately benefit from their estate, even if their spouse remarries or changes their will.

A well-drafted residuary clause is an essential part of an effective will.

About the author

Jennifer Russell is an associate in the wills, trusts and tax team at Wright Hassall, and is a member of the Society of Trust and Estate Practitioners (STEP).

Image: Getty Images