Legal Definitions - remainder subject to divestment

A remainder subject to divestment describes a future right to property that is currently established and belongs to a specific person, but which can be lost or taken away if a particular event or condition occurs after that right has already been granted. It means someone has a clear, present right to receive property in the future, but that right is not absolute and can be defeated or "divested" if a specified condition happens.

Here are some examples to illustrate this concept:

• Example 1: Family Farm Inheritance

  A will states: "I leave my family farm to my son, David, after his mother's passing. However, if David ever uses the farm for industrial purposes, the property shall instead go to my daughter, Lisa."

  Explanation: David has a remainder subject to divestment. He is clearly identified as the future owner of the farm, and his right to receive it is established upon his mother's death. This makes his interest "vested." However, his ownership is not absolute; it is "subject to divestment" because if he later uses the farm for industrial purposes (the condition subsequent), his right to the property will be lost, and it will transfer to Lisa instead.

• Example 2: Educational Trust Fund

  A trust document specifies: "The remaining balance of this trust shall be distributed to my granddaughter, Sophia, upon her 30th birthday. Nevertheless, if Sophia does not complete a master's degree by her 30th birthday, the funds shall be donated to the local library."

  Explanation: Sophia holds a remainder subject to divestment. She is the designated beneficiary, and her right to the trust funds is established to take effect on her 30th birthday. This makes her interest "vested." However, her right is "subject to divestment" because if she fails to meet the condition of completing a master's degree by that age, her claim to the funds will be lost, and they will be redirected to the library.

• Example 3: Coastal Property Deed

  A property deed grants a coastal cottage to: "My nephew, Michael, after my sister's lifetime use. Provided, however, that if Michael ever builds any structure taller than two stories on the property, ownership shall revert to my estate and be divided among my other heirs."

  Explanation: Michael has a remainder subject to divestment. He is the identified future owner of the cottage, and his right to possess it is established after his aunt's death. This makes his interest "vested." However, his ownership is "subject to divestment" because if he violates the condition of building a structure taller than two stories, his right to the property will be terminated, and it will pass to the grantor's other heirs.