Legal Definitions - remainder subject to a condition precedent

A remainder subject to a condition precedent describes a future right to own property that is not guaranteed. Instead, this right will only become valid if a specific event or circumstance occurs before the current owner's interest in the property ends. If the required condition is not met, the future right to the property will fail, and it will pass to someone else. This term also applies when the person who will eventually receive the property cannot be identified until a future event takes place. It is also commonly referred to as a contingent remainder.

Here are some examples:

• Educational Achievement: Imagine a will that states, "My vacation home shall pass to my niece, Sarah, provided that she has successfully completed her medical residency program by the time of my death."

  Explanation: Sarah has a future interest (a remainder) in the vacation home. However, her right to receive it is entirely dependent on a "condition precedent": she must complete her medical residency program. If the will's creator dies before Sarah finishes her residency, the condition is not met, and her remainder interest in the home fails, meaning the home would then pass to someone else as specified in the will (e.g., another relative or a charity).

• Business Continuity: A trust document specifies that a commercial office building will be transferred to the founder's son, Mark, if he is actively managing the family's software company at the time of the founder's passing.

  Explanation: Mark has a potential future interest in the office building. The "condition precedent" is his active management of the software company at the specific moment his father dies. If, at that time, Mark has left the company or is no longer involved in its management, the condition is not fulfilled, and the building would not pass to him, but rather to an alternative beneficiary named in the trust.

• Marital Status: A wealthy individual's will leaves a significant portion of their investment portfolio to their daughter, Emily, only if she is unmarried at the time of the individual's death. If she is married, the portfolio is to be donated to a specific environmental charity.

  Explanation: Emily has a potential future interest in the investment portfolio. The "condition precedent" is her marital status at the moment her parent passes away. If Emily is married at that time, the condition is not met, and her remainder interest in the portfolio fails, with the assets then passing to the designated charity.