The Residuary Estate section has been upgraded to a new format to support more flexible planning scenarios.

This guide explains what the update means, how to choose between Group Rule and Individual Rule, how the distribution layers work, and how to select the correct backup rule for common scenarios.

1. If You See This Notice

You may see the following notice on the platform:

“Your residuary details have been updated to a new format. Please review the previous setup below and re-enter using the updated format.”

“This is read-only. Please complete the format below to save your updated residuary plan.”

This means that the previous residuary estate setup is still shown for your reference, but it cannot be edited directly. You will need to review the previous setup and re-enter the details using the updated format.

2. What This Means

Review

Your previous residuary setup is shown for reference only.

Re-Enter

Re-enter the residuary plan using the latest format.

Save

Once saved, the new format will be used moving forward.

The basic flow is:

Previous Setup
For reference only

↓

Updated Format
Complete the residuary plan again using the new form

↓

Plan Updated Successfully
The new format will be used moving forward

3. Why Was This Updated?

The new format gives you more flexibility to handle different planning scenarios and reflect your client’s wishes more accurately.

It allows you to decide whether all beneficiaries should follow the same backup rule, or whether each beneficiary should have their own separate fallback plan.

Group Rule or Individual Rule?

Start With One Key Question

Do all beneficiaries in the same layer follow the same rule if they fail to inherit their share?

If the answer is yes, use Group Rule.

If the answer is no, use Individual Rule.

4. When to Use Group Rule

Use Group Rule when all beneficiaries in the same layer follow one common backup rule.

This is suitable when the setup is simple and all beneficiaries should be treated the same way if any of them cannot inherit.

Use Group Rule when:

• One common rule applies to the group in each layer

• The same backup rule applies to all beneficiaries in that layer

• The client wants a simple group-based setup

Example

“If my son cannot inherit, the remaining children share that portion.”

In this example, the same rule applies to the beneficiaries in the same layer. If one beneficiary cannot inherit, the remaining beneficiaries in that layer will share the affected portion.

5. When to Use Individual Rule

Use Individual Rule when different beneficiaries need different backup plans.

This is suitable when each beneficiary has a separate fallback path, or when the client wants more control over how each person’s share should be handled.

Use Individual Rule when:

• Different backup plans apply to different beneficiaries

• Each beneficiary needs a separate fallback path

• The client wants more control over each share

Example

“If my spouse cannot inherit, her share goes to my sister. If my son cannot inherit, his share goes to his own children.”

In this example, the spouse and son do not follow the same backup rule. Each person has a different fallback plan, so Individual Rule should be used.

6. Three Questions to Confirm With the Client

Before completing the residuary estate section, confirm the following with the client:

1. Who should receive the estate first?

These will be the First Choice beneficiaries.

2. If a beneficiary cannot inherit, where should the failed share go?

Confirm whether the failed share should:

• Go to the remaining beneficiaries in the same layer

• Pass to the Second Choice or Final Choice beneficiaries

• Pass by Per Stirpes

3. Do all beneficiaries follow the same rule?

Confirm whether all beneficiaries in the same layer follow the same backup rule, or whether each person needs a different plan.

7. Quick Decision Guide

Use Group Rule if the answer is the same for everyone.

Use Individual Rule if different beneficiaries have different backup plans.

How the Distribution Layers Work

8. Beneficiary Layers

The residuary estate setup uses different beneficiary layers. Each layer determines who receives the estate or affected share if the earlier layer cannot inherit.

First Choice

First Choice beneficiaries are the main beneficiaries who receive the residuary estate first.

Example:

A client may name their spouse, son, and daughter as First Choice beneficiaries.

Second Choice

Second Choice beneficiaries receive the affected share if the First Choice beneficiary cannot inherit and the selected rule passes the share to them.

Example:

If a son cannot inherit, his share may pass to the named Second Choice beneficiary, depending on the selected distribution option.

Final Choice

Final Choice beneficiaries are the last named beneficiaries used when the earlier layers fail.

Example:

If the First Choice and Second Choice beneficiaries cannot inherit, the affected share may pass to the Final Choice beneficiaries.

Intestacy Laws

If no valid named beneficiary remains, the estate or affected share may be distributed according to the law.

This means that if all named options fail, intestacy laws may apply.

Distribution Options

There are three main distribution options.

Option A: Redistribute among Remaining Beneficiaries

This means the failed share is redistributed equally among the remaining beneficiaries in the same layer before it falls into the next layer.

Best for clients who say:

“Give it to the surviving beneficiaries in the same layer.”

Example

First Choice beneficiaries:

• Spouse: 50%

• Son: 25%

• Daughter: 25%

If the son cannot inherit, his 25% share is redistributed among the remaining First Choice beneficiaries.

Result:

• Spouse receives 50% + 12.5%

• Daughter receives 25% + 12.5%

The son’s share is redistributed among the remaining First Choice beneficiaries.

Option B: Pass to Second Choice

This means the failed share passes to the named beneficiaries in the second layer.

Best for clients who say:

“If the first person cannot inherit, give it to the second layer beneficiary.”

Example

First Choice beneficiaries:

• Daughter: 50%

• Son: 50%

Second or Final Choice beneficiary:

• Spouse: 100%

If the daughter or son cannot inherit, the affected share passes to the Second or Final Choice beneficiary.

Use this when the same backup rule applies to all First Choice beneficiaries.

Option C: Pass by Per Stirpes

This means the failed share passes to that beneficiary’s own children and grandchildren, keeping it within their line of descendants.

Best for clients who say:

“If the first person cannot inherit, give it to their children and descendants.”

Example

First Choice beneficiaries:

• Child A: 50%

• Child B: 50%

If Child A cannot inherit, Child A’s 50% share goes only to Child A’s own children.

Example result:

• Grandchild A1: 25%

• Grandchild A2: 25%

The share does not go to Child B or Child B’s children.

Simple Fallback Flow

At each layer, select the distribution option that should apply if a beneficiary is unable to inherit.

The general flow is:

First Choice
↓

Second Choice
↓

Final Choice
↓

Intestacy Laws

Common Scenarios

Example 1: Group Rule — Redistribute among Remaining Beneficiaries

Client says:

“If one cannot inherit, the others in the same layer should share that portion.”

Use:

Group Rule

Select:

Redistribute among Remaining Beneficiaries

Example Setup

First Choice beneficiaries:

• Spouse: 50%

• Son: 25%

• Daughter: 25%

If the son cannot inherit, his share is redistributed among the remaining First Choice beneficiaries.

Result

• Spouse: 50% + 12.5%

• Daughter: 25% + 12.5%

This option is suitable when the client wants the remaining beneficiaries in the same layer to share the failed portion.

Example 2: Group Rule — Pass by Per Stirpes

Client says:

“If any child cannot inherit, that child’s share should go to his or her own children.”

Use:

Group Rule

Select:

Pass by Per Stirpes

Example Setup

First Choice beneficiaries:

• Child A: 50%

• Child B: 50%

If Child A cannot inherit, Child A’s 50% share goes only to Child A’s own children.

Result

• Grandchild A1: 25%

• Grandchild A2: 25%

The share does not go to Child B or Child B’s children.

This option is suitable when the client wants each child’s share to stay within that child’s own family line.

Example 3: Group Rule — Pass to Second or Final Choice Beneficiary

Client says:

“If either cannot inherit, that share should go to my Second or Final Choice beneficiary.”

Use:

Group Rule

Select:

Pass to Second or Final Choice

Example Setup

First Choice beneficiaries:

• Daughter: 50%

• Son: 50%

Second or Final Choice beneficiary:

• Spouse: 100%

If the daughter or son cannot inherit, the affected share passes to the Second or Final Choice beneficiary.

Use this when the same backup rule applies to all First Choice beneficiaries.

Example 4: Individual Rule — Different Distribution for Different Beneficiaries

Client says:

“I want my son and sister to inherit. If my son cannot inherit, his share should go to his children. But if my sister cannot inherit, her share should go to a NGO.”

Use:

Individual Rule

Why:

The son’s share follows his family line, while the sister’s share goes to a named second or final person.

Example Setup

For Son:

• Share: 50%

• If unable to inherit: Pass by Per Stirpes

For Sister:

• Share: 50%

• If unable to inherit: Pass to Second or Final Choice

Second or Final Choice beneficiary:

• NGO

Use this when a simple Group Rule would not reflect the client’s intention accurately.

Important Reminder

If all named options fail, intestacy laws may apply.

Before saving the residuary estate section, always confirm:

• Who receives the estate first

• What should happen if a beneficiary cannot inherit

• Whether all beneficiaries follow the same backup rule

• Whether any beneficiary needs a separate individual fallback plan

Once the updated residuary plan is saved, the new format will be used moving forward.