Legal Definitions - alternative remainder

An alternative remainder is a type of future interest in property that acts as a "backup" plan for who will receive the property after a preceding interest ends. It is a contingent interest, meaning it will only take effect if a specific condition is met, or if a primary, preferred remainder interest fails to vest (become certain).

To understand this, it's helpful to first know what a remainder is. A remainder is a future interest in property that is set to become possessory naturally after a prior, temporary interest (like a life estate) ends. For example, if a will states "to my wife for life, then to my son," the son has a remainder interest.

An alternative remainder arises when there are two or more possible remainders, and only one can ultimately take effect, depending on future events. It provides a contingent successor if the first designated remainder cannot come to fruition.

• Example 1: Inheritance through a Will

  A will states, "I leave my vacation cabin to my brother, David, for his lifetime. After his death, the cabin shall go to his children. However, if David dies without any children, then the cabin shall go to my sister, Emily."

  Explanation: David's children have the primary remainder interest in the cabin. Emily holds an alternative remainder. She will only receive the cabin if the condition for David's children (having children) is not met. If David has children, they inherit the cabin, and Emily receives nothing. If David dies childless, Emily inherits the cabin instead.

• Example 2: Property in a Trust

  A trust agreement specifies that the income from an investment portfolio goes to the grantor's spouse for life. Upon the spouse's death, the principal is to be distributed to "University A" for its endowment. The trust further states, "If University A is no longer in existence or has merged with another institution at the time of my spouse's death, then the principal shall be distributed to Charity B."

  Explanation: University A holds the primary remainder interest in the trust principal. Charity B holds an alternative remainder. Its right to receive the property is contingent upon University A's non-existence or merger when the spouse dies. If University A is still an independent entity, it receives the funds; otherwise, Charity B steps in as the alternative beneficiary.

• Example 3: Art Collection Bequest

  A will leaves a valuable art collection "to my niece, Clara, for her lifetime. After Clara's death, the collection shall go to the National Art Museum. However, if the National Art Museum has ceased to exist or is no longer accepting donations at the time of Clara's death, then the collection shall go to the Local Community Gallery."

  Explanation: The National Art Museum holds the primary remainder interest in the art collection. The Local Community Gallery holds an alternative remainder. Its right to receive the collection is entirely dependent on the condition that the National Art Museum is unable or unwilling to accept it when Clara dies. If the National Art Museum is still operational and accepting donations, it receives the collection, and the Local Community Gallery receives nothing.