WHAT IS Remainder Man
A remainder man is a property law term that refers to the person who inherits or is entitled to inherit property upon the termination of the estate of the former owner. In a trust account, a remainder man would be the person who receives the principal remaining after all other required payments have been made, such as those to the beneficiary and expenses.
BREAKING DOWN Remainder Man
The remainder man may exercise the right to hold and use 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 remainder man 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.
Remainder Man and Life Estate
A life estate deed is the 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 property is allowed to use it for the duration of their life. Almost all deeds creating a life estate will also name a remainder man; the person or persons who get the property when the life tenant dies.
A major 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. One complicating factor to life estate deeds, especially in real estate dealings, is that all parties need to be aware of the fact that both the life tenant and the remainder man have ownership interests, despite each having different right of possession. The life tenant is the owner of the property until they die. However, the remainder man also has an ownership interest in the property while the life tenant is alive.