Legal Definitions - remainder vested subject to open

The legal term remaindervested subject to open describes a future right to property that is certain to be received by a particular group of individuals, but the exact number of people in that group is not yet finalized. This means that while the existing members of the group have a guaranteed right to the property, their individual share might decrease if more people join the group before the property is actually distributed.

To break it down:

• A remainder is a future interest in property that takes effect after another person's right to use the property ends (for example, after a life estate).
• Vested means that the identity of at least one person who will receive the property is known, and there are no conditions that must be met for them to receive it, other than waiting for the prior interest to end. It's a certainty, not just a possibility.
• Subject to open means that while the interest is vested in some members of a group, the group itself can still expand to include more members. If more members are added, the share of each existing member will be reduced.

Here are some examples to illustrate this concept:

• Example 1: Family Farm Inheritance

  Imagine a will that states: "I leave my family farm to my daughter, Susan, for her lifetime. After Susan's death, the farm shall be divided equally among all of Susan's children." At the time the will takes effect, Susan has one child, Emily.

  How it illustrates the term: Emily has a remainder vested subject to open. She is guaranteed to receive a share of the farm after her mother's death (it's "vested"). However, if Susan has more children later, Emily's individual share of the farm will become smaller because the property will be divided among a larger group (it's "subject to open").

• Example 2: Educational Trust Fund

  A wealthy grandparent establishes a trust fund that specifies: "The income from this trust shall go to my son, Michael, for his life. Upon Michael's death, the principal of the trust shall be distributed in equal shares to all of Michael's nieces and nephews for their education." At present, Michael has two nieces, Chloe and Mia, and one nephew, Liam.

  How it illustrates the term: Chloe, Mia, and Liam each have a remainder vested subject to open. They are certain to receive a portion of the trust principal after Michael passes away (it's "vested"). However, if Michael's siblings have more children (who would then be Michael's nieces or nephews) before Michael dies, the existing nieces and nephews' individual shares will be reduced as the principal is divided among more beneficiaries (it's "subject to open").

• Example 3: Shares in a Family Business

  A founder of a successful family business creates a legal document stating: "Upon my retirement, 15% of my company shares will be transferred to my grandchildren, to be divided equally among them." Currently, the founder has one grandchild, Noah.

  How it illustrates the term: Noah has a remainder vested subject to open. He is guaranteed to receive a share of the 15% company shares upon his grandparent's retirement (it's "vested"). However, if the founder has more grandchildren before retirement, Noah's individual percentage of the shares will decrease as the total 15% is split among a larger group of grandchildren (it's "subject to open").