Your largest and most valuable assets and your most significant financial liabilities will likely dominate the estate planning process. The same is true of making arrangements to provide for your closest and most dependent family members, like a spouse or a child.
Testators may invest in insurance that will cover their debts when they die or arrange for the transfer of real property or business ownership to occur without the involvement of the probate courts. Sometimes, the goal of your estate will be to provide support for some and financial resources for others.
For example, if you remarried later in life, you may want to give your new spouse an opportunity to remain in your marital home for the rest of their life. However, the home is likely a significant portion of your estate. You may want your children to inherit it. You can potentially move the property into a trust so that your spouse can live there without having the authority to sell it off. In such a scenario, you would need to name a remainderman.
What exactly is a remainderman?
When you leave instructions for property from a life estate after the death of the beneficiary, the party that will inherit that property is the remainderman. In the situation outlined above involving a marital home, a spouse may have the right to live in the house, but the actual ownership will pass to the remainderman or your children at the time of your spouse’s death.
You may need to consider the remainder of your estate even without a life estate or complex trust scenario. Although technically you don’t need to name a remainderman, you still need to consider the property you hold but didn’t specifically include in your estate documents.
It would be very time-consuming to create an exhaustive estate plan that addresses every single asset you own individually. Often, those bequeathing property to loved ones using a will can also name someone to receive the remainder of their estate, which will include any other assets not named specifically in the documents.
Considering what happens with property in the long-term after your death and also what will happen to your smaller assets can be an important part of creating a comprehensive estate plan.