What Is a Remainderman?

A remainderman is a property law term that refers to the person who inherits or is entitled to inherit property upon the termination of the life estate of the former owner.

A life estate refers to an arrangement in which a person’s ownership of property lasts for the duration of their life and then is transferred back to the original owner or a third party. That person to whom ownership of the property is transferred is the remainderman.

In a trust account, a remainderman receives the principal remaining in the trust. However, this transaction only happens after all the required payments have been made, such as expenses.

Key Takeaways

  • The remainderman is the person who inherits property after the termination of a life estate.
  • For trust accounts, the remainderman receives the remaining principal after the estate has been distributed.
  • A remainder interest is a future interest a person has in an asset.
  • A remainderman can exercise their right to use and hold property in a trust, but first, the trust must be dissolved.
  • The life tenant can sell inherited property with the remainderman’s consent.

Understanding a Remainderman

The remainderman may exercise the right to hold and use the property in the trust only after the trust has been completely dissolved. For example, speaking to physical property, if the owner of the property bequeaths a piece of property to Person A for life and then to Person B upon Person A’s death, Person B is the rightful owner of a future interest, i.e., the remainder.

This is to say that Person B’s interest becomes active only upon Person A’s death. The remainderman will inherit the property upon the death or termination of the former owner’s estate. The property may also be inherited when there is a specific notation of the same in the trust.

Advantages and Disadvantages to a Life Estate

As opposed to a trust, a life estate deed is a vehicle by which the property owner, or the grantor, transfers legal ownership to another person or the life tenant. In many cases, the grantor and the life tenant are the same person, but not always. Typically, the deed will state that the occupant of the property is allowed to use it for the duration of their life.

Almost all deeds creating a life estate will also name a remainderman—the person or persons who get the property when the life tenant dies.

Life estates are often used to provide for another person's well-being, without granting ownership of the relevant property. For example, a deceased homeowner may bequeath the family home in a life estate to their spouse, but name their children as remaindermen. This arrangement ensures the spouse will continue to have a home, and that it will ultimately be inherited by their children.

A significant benefit of a life estate deed is that it can be used to pass property upon the life tenant's death without it being part of the life tenant’s estate. As a result, the property does not have to go through probate. Any interest that the life tenant had in the property ended upon death and did not become a part of the life tenant’s estate.

Advantages of a Life Estate
  • Life Estates are simpler than other bequests, requiring only a deed at a county recorder's office.

  • Life tenants can lease or rent the property in their life estate, just as if they owned it.

  • Life estates can be administered without going through probate court.

  • The remainderman gets a favorable tax basis when they inherit the property.

  • Unlike ordinary tenancy, life tenants take responsibility for maintaining and insuring the property of the life estate.

Disadvantages of a Life Estate
  • Life estates cannot be revoked, unless the life tenant and remainderman agree.

  • Life tenants can still damage the property, to the disadvantage of the remainderman.

  • Owning a life estate may be considered a monetary asset, impacting the life tenant's eligibility for some social services.

Remainderman Rights

One complicating factor to life estate deeds, especially in real estate dealings, is that all parties need to be aware that both the life tenant and the remainderman have ownership interests, despite each having different rights of possession. The life tenant is the owner of the property until they die.

However, the remainderman also has an ownership interest in the property while the life tenant is alive. They have an interest in ensuring that the life tenant does not damage the property, diminish its value, encumber it, or attempt to sell it. The life tenant can sell the property with the remainderman’s consent and participation. Still, the remainderman may be entitled to a larger portion of the proceeds, depending on the life tenant’s age and life expectancy.

One major advantage is that life estates do not need to go through probate.

Example of a Remainderman

Life estates and remaindermen are often relevant in cases of a family inheritance. Imagine a well-off parent, who wishes to leave the family home to their spouse and children. Knowing that the spouse and children are likely to quarrel over a divided asset, the benefactor chooses to leave it to their spouse in a life estate: the spouse can continue living in the home until they die, but the children will ultimately inherit the house.

Although a life estate is simpler than other bequests, it still requires some discussion with a lawyer to set up. After the appropriate consultations, the life estate needs only to be registered with a county recorder: there is no need to go through probate court.

This arrangement ensures that the spouse remains comfortable, but that the house ultimately stays in the family. The life tenant does not pay any rent, but they are also unable to sell the home, and they are responsible for any maintenance costs. When the spouse dies, the home passes to the remaindermen–in this case, the couple's children.

Remainderman FAQs

What Is a Life Estate With Powers vs. a Life Estate Without Powers?

A life estate "with powers" gives the life tenant the ability to sell, mortgage, or otherwise encumber the property. In a life estate without powers, the life tenant requires the consent of the remainderman to encumber the property. Both are effective ways of bequeathing property without the hassle of probate.

Is a Remainderman a Beneficiary?

Yes. A remainderman is considered the beneficiary of a life estate and stands to inherit any remaining property after the life tenant's death.

Can a Remainderman Be Removed From a Life Estate?

A remainderman cannot be removed from a life estate without their permission. This would require them to sign a new deed, transferring their interest in the life estate.