key term - Remainder

Definition

A remainder is a future interest in property that becomes possessory when a prior estate, such as a life estate, ends. It is a way of determining who will own the property after the current owner's interest has been terminated, allowing for a smooth transition of property rights. Remainders are essential in understanding how property ownership can change hands over time and are often used in wills and trusts to dictate future ownership.

5 Must Know Facts For Your Next Test

1. Remainders can be either vested or contingent, determining how and when the future interest will take effect.
2. A vested remainder means that the person who holds it has a current right to the property once the preceding estate ends, while a contingent remainder may depend on specific conditions.
3. Remainders are often used in estate planning to ensure property is passed on according to the owner's wishes after their death.
4. In cases where there are multiple remaindermen, the interests are generally divided according to how they are stated in the original grant or will.
5. If there is no valid remainder specified, the property may revert back to the grantor or pass through intestacy laws.

Review Questions

• How do vested and contingent remainders differ in terms of their future interests?
  • Vested remainders provide a guaranteed future interest that will take effect when the preceding estate ends, ensuring that the holder will receive ownership as long as they are alive. In contrast, contingent remainders depend on specific conditions being met or certain events occurring before they can become possessory. This difference affects how property rights are secured and transferred after the termination of prior estates.
• What role do remainders play in estate planning and how can they impact the distribution of property after death?
  • Remainders play a crucial role in estate planning by allowing individuals to designate specific individuals or entities to receive their property after their death. This ensures that assets are distributed according to their wishes and can help avoid potential disputes among heirs. By using remainders in wills or trusts, property owners can maintain control over their assets even after passing away, guiding the transition of ownership effectively.
• Evaluate the implications of not specifying a remainder in a will or trust and its potential effects on property ownership.
  • Not specifying a remainder in a will or trust can lead to significant implications for property ownership. Without clear instructions, the property may revert back to the grantor or pass according to intestacy laws, which might not align with the deceased's intentions. This lack of clarity can create confusion among heirs and potentially lead to disputes over ownership rights. Thus, carefully considering and articulating remainders is essential for effective estate planning.

Related terms

life estate: A property interest that lasts for the duration of an individual's life, after which the property passes to another party.

vested remainder: A type of remainder that is guaranteed to become possessory upon the termination of the preceding estate, provided that the holder is alive at that time.

contingent remainder: A type of remainder that is dependent on certain conditions being met or on an event occurring before it can become possessory.