Remainders Study Outline

A remainder is a future interest held by a grantee that becomes possessory upon the natural expiration of a prior possessory estate, such as a life estate. Remainders can be classified as either vested or contingent. A vested remainder means there is an existing identifiable person who is entitled to the property upon the termination of the preceding estate. Conversely, a contingent remainder is dependent on an uncertain event or an unascertained person. The distinction between these types is critical, as it affects the validity and transferability of the remainder interest, especially under the Rule Against Perpetuities.

The Rule Against Perpetuities (RAP) applies to contingent remainders and mandates that no interest is valid unless it must vest, if at all, within 21 years of a life in being at the time of the interest's creation. This rule serves to limit the duration of future interests and prevent uncertainty in property ownership. Understanding how the RAP interacts with remainders is essential for analyzing the validity of contingent remainders and ensuring that estate plans comply with this critical legal principle. Besides RAP, the doctrine of worthier title, which limits contingent remainders when the grantor is the one creating the interest, is also significant in this context.

Remainders can be transferred during the grantor's lifetime and can also be inherited upon death, subject to their classification. Vested remainders are transferable and descendible, which allows them to be conveyed by deed or will. Contingent remainders, however, may face restrictions because their conditional nature can affect the ability to transfer. One must analyze the specific terms of the conveyance to determine whether the terms permit such transfers. For example, if a contingent remainder is created out of a life estate with a condition precedent, the satisfaction of the condition must occur for the remainder to become viable and transferable.

The concept of destruction of remainders deals with scenarios where a remainder is rendered void before it can take effect. A remainder is destructible if it is subject to a condition that is not met upon the preceding estate's expiration, causing the remainder to fail. Moreover, if a vested remainder is not yet possessory when the prior estate terminates, the law may permit the property to revert to the grantor unless other provisions have been made. It's also important to consider how actions by the life tenant or subsequent transfers can impact the existence and enforceability of remainders.