Residue vs. Remainder What's the difference between the two?

When creating a trust, lawyers often utilize complex terminology. However, this language serves a specific purpose. Each term has a distinct legal definition and use, even if it may sound similar to others.

Take, for example, the words “should” and “shall.” They may seem interchangeable. But legally, “shall” is a command that doesn’t allow for any wiggle room, while “should” implies a recommendation or suggestion. Understanding these nuances is critical when drafting legal documents.

In estate planning, a common question is “What is the difference between residue and remainder?”  The terms “residue” and “remainder” both refer to the assets that are left over after specific gifts and bequests have been distributed from an estate or trust. However, there is a subtle difference in their meanings.

Remainder

The term “remainder” refers to a specific gift or portion of the estate that is designated to be given to a beneficiary after the occurrence of a particular event or the expiration of a certain period of time. For example, a testator may leave a bequest of $10,000 to a charity but stipulate that after the charity receives the funds, any remaining amount should go to their grandchildren. In this case, the grandchildren would be entitled to the remainder of the estate.

Residue

On the other hand, the term “residue” refers to the remaining assets of the estate or trust that are not specifically designated to be given to any particular beneficiaries. These assets are distributed to the beneficiaries according to the terms of the will or trust document, which may specify that they be divided among the heirs in equal shares or according to other instructions.

In short, the term “remainder” refers to a specific gift or portion of the estate, while the term “residue” refers to the assets that are left over after all specific gifts have been distributed.

If you need assistance with estate planning, our law firm, Gem State Attorneys can help you navigate the complexities of the process. Contact us today to schedule a consultation.

Disclaimer: The information provided on this blog is for general informational purposes only and is not intended to be legal advice. The content of this blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking professional legal counsel. The opinions expressed at or through this blog are the opinions of the individual author and may not reflect the opinions of the blog or any individual attorney.