Legal Definitions - executed remainder

Executed remainder is an older legal term that refers to what is now more commonly known as a vested remainder. This describes a future interest in property that is absolutely guaranteed to a specific, identifiable person, and there are no conditions that could prevent that person from eventually receiving the property. In essence, the right to the property is fixed and certain, even though the actual possession of the property will occur at a later time.

Here are some examples to illustrate this concept:

• Real Estate - Life Estate: An elderly woman, Sarah, creates a will stating that her husband, John, can live in their family home for the rest of his life. After John passes away, the home will then go to their daughter, Emily.

  Explanation: In this situation, Emily holds an executed remainder (or vested remainder) in the family home. She is an identifiable person (Emily), and her right to receive the property is certain; it will happen automatically upon John's death. There are no other conditions she needs to meet to inherit the house.

• Financial Asset - Trust: A wealthy grandparent establishes a trust for their grandchild, Alex. The trust specifies that Alex will receive a specific portfolio of stocks and bonds when he turns 30 years old. Alex is currently 20.

  Explanation: Alex has an executed remainder in the stock and bond portfolio. He is a clearly identified individual, and his right to the assets is guaranteed to vest when he reaches a specific age. There are no other conditions (like needing to graduate from a particular university or get married) that could prevent him from receiving the assets.

• Business Interest: A small business owner, Mr. Chen, agrees in a formal contract that his long-time manager, Ms. Rodriguez, will receive a 20% ownership stake in the company upon Mr. Chen's retirement, which is planned for five years from now.

  Explanation: Ms. Rodriguez possesses an executed remainder in the 20% ownership stake. She is a specific, known person, and her right to the business interest is certain to materialize upon Mr. Chen's retirement. There are no additional conditions that could revoke or prevent her from acquiring this stake.