As a business professional, you may have likely heard of the term defeasible remainder. But, you may be uncertain what it exactly means. Defeasible remainder is a legal concept that defines the rights of a person who holds title to a property in certain circumstances. To understand what defeasible remainder is, and how it might be relevant to your business, read on!
What Does Defeasible Remainder Mean?
Defeasible means “liable to revocation or annulment” or “capable of being defeated or annulled.” In legal terms, defeasible remainder is an interest in real estate (land) and includes the right to possess the property after the current owner has finished his or her period of ownership.
The most common example of defeasible remainder is a will or a trust. With a will, for example, a person can set up a trust in which they list beneficiaries and set a period of time during which these beneficiaries can own the property after their death. Thus, the beneficiaries will have a defeasible remainder in the property.
In terms of law, these trusts are known as “lives in being,” meaning that the property ownership rights are being passed to someone currently alive. These lives in being trusts must also include a “determinable future interest,” meaning that there must be an exact date specified for the benificiary’s ownership rights to take effect. When this date is reached, the trust is “terminated,” and the benificiary’s defeasible remainder comes into effect.
How Is Defeasible Remainder Relevant to Business Professionals?
For business professionals, understanding and being aware of defeasible remainder is important as it can play a role in how properties are bought and sold, as well as in the overall estate planning process. Knowing how this type of remainder works in wills and trusts can help business owners navigate complex legal issues and maximize their interests when dealing with property ownership.
Additionally, business professionals should also consider how defeasible remainder can be used to protect their assets. By setting up a will or trust that contains a defeasible remainder, business professionals can ensure that their property and assets can be passed on to their beneficiaries in the event of their death.
Conclusion
Defeasible remainder is an important legal concept for business professionals to understand. Knowing how this type of remainder works in wills and trusts can help business professionals navigate complex legal issues and maximize their interests when dealing with property ownership. Additionally, this concept can also be used to protect their assets and ensure that their property and assets can be passed on to their beneficiaries in the event of their death.