Minnesota Remainder Interests

Minnesota Remainder Interests

M.S. Section 500.11 identifies that if a Minnesota future estate is dependent on a precedent estate, it may be referred to as a remainder, and may be created and transferred by that name.

Minnesota Remainder Interests Are Transferable

M.S. Section 500.16 identifies that Minnesota remainder interests are descendible pursuant to intestate succession, devisable by Will, and alienable by deed of conveyance, in the same manner as estates in possession.

Minnesota Vested and Contingent Remainder Interests

M.S. Section 500.12 identifies that since they are future estates, remainder interests may be either vested or contingent.

Minnesota Vested Remainder Interests

M.S. Section 500.12 and a number of judicial decisions identify that remainder interests are vested when there is a person in being who would have an immediate right to the possession on the ceasing of the intermediate or precedent estate.

With respect to vested Minnesota remainder interests, the right of the estate is fixed and certain even though the right of possession is deferred to some future period, and the use, possession, and enjoyment by the holders of the remainder interests commence upon the termination of the life estate by the death of the life tenant.

The owner of remainder interests in fee simple subject to life estates of others have present interests in the property.

However, such interests do not entitle the holders of remainder interests to possession or occupancy of the property while the life tenant lives, absent an agreement to the contrary.

Denzer v. Prendergast, 267 Minn. 212, 126 N.W.2d 440 (1964).

Minnesota Contingent Remainder Interests

M.S. Section 500.12 and a number of judicial decisions identify that Minnesota remainder interests are contingent while the person to whom or the event on which they are limited takes effect remains uncertain.

Minnesota Vested vs. Contingent Remainder Interests

M.S. Section 500.12 identifies that since they are future estates, remainder interests may be either vested or contingent.

In attempting to classify Minnesota remainder interests as either vested or contingent, the courts are required to ascertain and to give effect to the intention of a testator.

In re Schmidt’s Will, 256 Minn. 64, 97 N.W.2d 441 (1959).

Whether remainder interests are vested or contingent depends on the language employed in the governing document.

If a conditional element is incorporated into the description of, or the gift to, the holders of remainder interests, the remainder is contingent.

In re Schmidt’s Will, 256 Minn. 64, 97 N.W.2d 441 (1959).

A testator may specify in a Will when a remainder interest will vest after a particular estate.

Rights and Duties of Holders of Minnesota Remainder Interests

Between life tenants and the holders of remainder interests, there is a community of interest and a community of duty similar to those rights and duties relating to cotenants property.

Mortgage Liens and Minnesota Remainder Interests

The holder(s) of Minnesota remainder interests are liable for the principal amount due on any prior mortgage lien that are in default before the Minnesota remainder interests come into being, in the absence of other contractual or testamentary provisions.

Browning v. Browning, 246 Minn. 327, 76 N.W.2d 100 (1956).

M.S. Section 501C.1113; M.S. Section 501C.1114.

Actuarial Value of Minnesota Remainder Interests

The value of a Minnesota remainder interest would be determined to be the total net sales price for the property, minus that part of the net sales price allocable to the life estate.

Alternatively, if a Minnesota remainder interest to be valued is to take effect after the death of one individual, the present value of the interest is computed by multiplying the value of the property by the appropriate remainder interest actuarial factor that corresponds to the applicable Code Sec. 7520 interest rate and the remainder interest period in Table S for one measuring life.

Reg § 20.2031-7(d)(2)(ii); Reg § 25.2512-5(d)(2)(ii).

However, if a Minnesota remainder interest to be valued is to take effect after a definite number of years, the present value of the Minnesota remainder interest to be valued is computed by multiplying the value of the property by the appropriate remainder interest actuarial factor that corresponds to the applicable Code Sec. 7520 interest rate and the remainder interest period in Table B for a term certain.

Reg § 20.2031-7(d)(2)(ii); Reg § 25.2512-5(d)(2)(ii).

Conclusion – Minnesota Remainder Interests

If you need any assistance with respect to a Minnesota life estate, or a Minnesota remainder interest, contact attorney Gary C. Dahle, 763-780-8390, or gary@dahlelaw.com.

Gary C. Dahle – Attorney at Law

2704 Mounds View Blvd., Mounds View, MN 55112

Phone: 763-780-8390 Fax: 763-780-1735

gary@dahlelaw.com

——— Gary C. Dahle Attorney at Law ———

Minnesota Remainder Interests

Minnesota Remainder Interests Are Transferable

Minnesota Vested and Contingent Remainder Interests

Minnesota Vested Remainder Interests

Minnesota Contingent Remainder Interests

Minnesota Vested vs. Contingent Remainder Interests

Rights and Duties of Holders of Minnesota Remainder Interests

Mortgage Liens and Minnesota Remainder Interests

Actuarial Value of Minnesota Remainder Interests

Conclusion – Minnesota Remainder Interests