Legal Definitions - cross-remainder

A cross-remainder is a specific legal arrangement, typically found in wills or trust documents, that dictates how property is inherited when it is initially given to two or more people to share during their lifetimes. It's a mechanism designed to keep property within a designated group of beneficiaries until the last one dies.

Here's how it works: If property is granted to several individuals for their lives, and one of them dies, their share of the property does not pass to their own heirs or revert to the original owner's estate. Instead, that deceased individual's share "crosses over" to the *surviving* co-owners, increasing their respective portions. This process continues until only one of the original beneficiaries remains alive. Upon the death of that last survivor, the entire property then passes to the ultimate beneficiaries named in the will or trust.

The primary purpose of a cross-remainder is to ensure that the property remains undivided and within a specific group of beneficiaries for as long as any of them are alive, preventing parts of it from being separated prematurely.

• Example 1: A Family Vacation Home

  Imagine a parent's will states: "I leave my vacation home to my three children, Sarah, Tom, and Emily, for their lives, with a cross-remainder. Upon the death of the last surviving child, the home shall pass to my grandchildren, equally."

  How it illustrates: If Sarah dies first, her one-third life interest in the home does not go to her own children or back to the parent's estate. Instead, her share "crosses over" to Tom and Emily, who now each effectively have a one-half life interest. If Tom then dies, his entire share (including what he received from Sarah) "crosses over" to Emily, who now holds the full life interest in the home. Only after Emily's death will the entire vacation home pass to the grandchildren, as originally intended.

• Example 2: Shared Farmland for Lifetime Income

  A wealthy landowner establishes a trust, granting the income from a large tract of farmland to two long-time employees, Mr. Chen and Ms. Rodriguez, for their respective lifetimes, with a cross-remainder. The trust specifies that after both Mr. Chen and Ms. Rodriguez have passed away, the farmland itself will be donated to a local agricultural college.

  How it illustrates: If Mr. Chen dies, his share of the farmland's income does not go to his family. Instead, it "crosses over" to Ms. Rodriguez, who then receives 100% of the income from the farmland for the remainder of her life. The purpose is to ensure that the income benefit stays entirely with the surviving designated employee. Only after Ms. Rodriguez's death will the farmland be transferred to the agricultural college.

• Example 3: An Art Collection for Curators

  A will leaves a valuable private art collection to three named art curators, David, Maria, and Ken, for their joint lifetimes, with a cross-remainder. The will stipulates that they may display the collection in their respective galleries and benefit from its prestige. Upon the death of the last surviving curator, the entire collection is to be donated to a national museum.

  How it illustrates: If David dies, his right to display and benefit from a portion of the collection "crosses over" to Maria and Ken. If Maria then dies, her share (including what she received from David) "crosses over" to Ken, who then has the sole right to the collection for his remaining life. This ensures the collection stays within the group of designated curators until the very end, at which point it moves to the national museum as the ultimate beneficiary.