Your residuary estate is everything that you own.  Your residuary gift will typically be the largest gift or gifts that you give.  You can gift your residuary estate to a single person or split it into different percentage shares.

Your residuary estate will rise and fall with the value of your assets and cash.

Any specific gifts or legacies will be taken out of the residuary estate.  The residuary beneficiaries will receive less.  If you provide a specific gift that is "free of inheritance tax" then any inheritance tax due will come out of the residuary.  Again - this reduces the value of the residuary estate.

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