Remainder interest is a future ownership right in property or trust assets that takes effect after the termination of a prior interest, such as a life estate or income interest. In estate planning, remainder beneficiaries receive whatever is left when the measuring interest ends, for example when a surviving spouse who had income rights passes away. Remainder interests can be vested or contingent and are key components of strategies like charitable remainder trusts, QTIP trusts, and qualified personal residence trusts. For tax purposes, the actuarial value of a remainder interest is calculated using IRS tables and assumptions, influencing gift, estate, and charitable deduction amounts.

Advisors encounter remainder interests when explaining how trust distributions work across generations or between a spouse and children from a prior marriage. Attorneys design documents so that income or use rights go to one party and the remainder to another, balancing support for a current beneficiary with preservation for ultimate heirs. Charitable planning often uses remainder interests to provide donors with income while guaranteeing a future gift to a charity. Life insurance may complement remainder interest planning by providing liquidity, equalizing inheritances, or replacing value for non-remainder heirs. Clear explanation of remainder interest helps clients understand who controls and benefits from assets at different stages over time.