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Simple English definitions for legal terms
remainder interest
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A quick definition of remainder interest:
Remainder interest refers to the property that is passed on to a beneficiary after an income interest has ended. This means that if someone puts their property in a trust and designates that the income from the property goes to one person for their lifetime, then after that person passes away, the property will go to another person, known as the remainder beneficiary.
A more thorough explanation:
Definition: Remainder interest refers to the property that is passed on to a beneficiary after the end of an intervening income interest.
Example: A grantor places a piece of real estate in trust with the income going to A for their lifetime. After A's death, the property passes on to B. In this case, B has a remainder interest in the property.
Another example could be a trust set up for a child's education. The income from the trust is used to pay for the child's education, and after they graduate, the remainder of the trust is passed on to another beneficiary.
These examples illustrate how a remainder interest works. It is a way to ensure that property or assets are used for a specific purpose or person during a certain period, with the remainder going to another beneficiary after that time has passed.
remainder indefeasibly vested | remainder subject to partial divestment