Legal Definitions - remainder

A remainder is a legal term in property law that describes a future right to own and possess property, typically real estate, that is granted to a third party. This future right is created at the same time an initial, temporary right to the property is given to someone else, all within the same legal document (like a will or a deed).

The key characteristic of a remainder is that the third party's right to take possession becomes active automatically and naturally once the initial temporary right ends. The initial temporary right must be one that can end naturally, such as when a person dies (in the case of a "life estate") or when a specific period of years expires.

Remainders are distinct from a "reversion," where the property would return to the original grantor (the person who created the interest) or their heirs once the temporary right ends.

There are two main types of remainders:

• Vested Remainder: This is a future interest that is certain to become possessory and belongs to an identifiable person. There are no conditions for this person to receive the property other than the natural end of the preceding temporary interest.
• Contingent Remainder: This is a future interest where either the specific person who will eventually receive the property is not yet identified, or a specific condition must be met before they can take possession, in addition to the natural end of the preceding interest.

Examples of Remainders:

• Example 1 (Vested Remainder - Life Estate):

  Mr. Henderson, a widower, wants to ensure his sister, Eleanor, has a place to live for the rest of her life, but ultimately intends for his vacation cabin to go to his nephew, Mark. In his will, Mr. Henderson states: "I grant my vacation cabin to my sister, Eleanor, for the duration of her life. Upon Eleanor's death, the cabin shall pass to my nephew, Mark."

  How this illustrates a remainder: Mark holds a remainder interest. He is a third party receiving a future right to the property. His right will become possessory automatically upon the natural end of Eleanor's life estate (her death). This is a vested remainder because Mark is an identified person, and there are no conditions for him to inherit other than Eleanor's natural passing.

• Example 2 (Contingent Remainder - Condition Precedent):

  A successful entrepreneur, Ms. Davies, wants to provide for her elderly father, Arthur, and also encourage her grandson, Liam, to pursue higher education. She creates a deed stating: "I grant my apartment building to my father, Arthur, for his life. Upon Arthur's death, the apartment building shall pass to my grandson, Liam, if Liam has graduated from a four-year university by that time. If Liam has not graduated, the building shall instead go to my alma mater's endowment fund."

  How this illustrates a remainder: Liam has a remainder interest. He is a third party whose right to the property is future. It will become possessory upon the natural end of Arthur's life estate. This is a contingent remainder because Liam's ability to take possession is subject to a specific condition (graduating from a four-year university) that must be met *before* Arthur's death. If the condition isn't met, the property goes elsewhere.

• Example 3 (Contingent Remainder - Unidentified Holder):

  A couple, the Millers, own a commercial property. They want to provide rental income for their business partner, Mr. Jones, for a set period, and then have the property benefit their future grandchildren. Their trust document states: "We grant the commercial property to Mr. Jones for a period of fifteen years. After the expiration of these fifteen years, the property shall pass to whichever of our grandchildren are alive at that time."

  How this illustrates a remainder: The Millers' grandchildren collectively hold a remainder interest. They are third parties receiving a future right to the property. Their right will become possessory upon the natural end of Mr. Jones's fifteen-year term. This is a contingent remainder because, at the time the trust is created, it's uncertain *which* specific grandchildren will be alive in fifteen years to take possession. The exact holders of the future interest are not fully identified until the preceding interest naturally ends.