2. Future Estates (RAP) Flashcards
What is a future estate?
Grantor gives to Grantee interest including the right to ‘future’ ‘possession’
- ‘Present’ legally protected right
- NOT expectancy
What is a reversionary interest?
Grantor’s future interest reverted back from Grantee to Grantor
What are the types of reversionary interests?
Right of entry
- Fee simple subject to condition subsequent
- Life estate subject to condition subsequent
Reversion (Possibility of reverter)
- Fee simple determinable
- Life estate determinable
- Grantor conveys estate (lesser duration) to Grantee
- Grantee reverts estate (greater duration) to Grantor upon termination of specified event
- By operation of law (NO need to be expressly stated)
What are the rights of a reversion holder?
Sue TP for damages (tort)
Sue Life Tenant for waste
Is a reversionary interest transferrable?
Conveyance
- NOT right of entry
Devise (by will)
Descend (by NO will)
Is a reversionary interest subject to Rule Against Perpetuities?
NO
- Vested interest (Grantor’s reversionary interest + specified event are certain)
What is a remainder?
1) Transferee’s future interest
2) Upon ‘natural’ termination of preceding estate
- Grantor => Grantee
3) In same disposition as preceding estate
- Grantor => Grantee => Transferee
- Otherwise if (Grantor => Grantee) then (Grantor => Transferee) => Transferee becomes Holder of reversionary interest
4) Expressly created
What is the difference between a reversionary interest and a remainder?
Reversionary interest
- NO need to be expressly created (by operation of law)
Remainder
- Must be expressly created
What type of present estates can a remainder be included in?
Defeasible fees
- Naturally terminates upon specified event
Life estates
- Naturally terminates upon end of one’s life
NOT fee simple
- NOT naturally terminate (indefinite duration)
- Cannot cut short preceding estate
- Cannot transfer without a time gap
What is an indefeasibly vested remainder?
1) Ascertained persons
2) NO condition precedent
3) NO divestment/diminuition
What happens if the Transferee of the indefeasibly vested remainder dies before the Grantee?
Indefeasibly vested remainder passes to;
- Transferee’s devisees (by will)
- Transferee’s heirs (by NO will)
What is a vested remainder subject to open (partial divestment)?
1) NOT ascertained remaindermen
- Class gift
- Survivorship
2) Diminuition
- By others in class who will become entitled to share in remainder (tenants in common - equal shares)
When does a vested remainder subject to open become an indefeasibly vested remainder?
When class closes (becomes ascertainable) once;
- Someone calls for distribution
- Class of persons no longer possible
What happens to the interest of a remainderman who holds a vested remainder subject to open if he dies before the class closed?
Remainderman’s share => Either;
- Remainderman’s devisees (by will)
- Remainderman’s heirs (by NO will)
What interests do remaindermen possess in an open class?
Ascertained remaindermen
- Vested remainder subject to open (possessory upon natural termination of preceding estate when Parent dies)
NOT ascertained remaindermen
- Contingent remainder (NOT possessory upon natural termination of preceding estate - Not sure if ascertainable before Parent dies)
What is a vested remainder subject to condition subsequent (total divestment)?
1) Ascertained remaindermen
2) Condition subsequent
- Terminates remainderman’s right to possession + enjoyment
- If TP included => Third party’s executory interest becomes possessory
- If NO TP included => Grantor’s reversionary interest becomes possessory
What is a contingent remainder?
NOT ascertained remaindermen (subject to persons)
- Condition precedent: Remaindermen must survive Parent
- Becomes vested remainder subject to open once ascertained BUT class not closed yet
- Otherwise Grantor’s reversionary interest becomes possessory (if Remaindermen do NOT survive Parent)
Condition precedent (subject to event)
- Becomes possessory subject to event
- Remainderman’s contingent remainder becomes indefeasibly vested remainder
- Otherwise Grantor’s reversionary interest becomes possessory
Are remainders transferrable?
Conveyance
- Contingent remainders (most states) (NOT common law)
Devise (by will)
- UNLESS survival is condition to taking interest (contingent remainders)
Descend (by NO will)
- UNLESS survival is condition to taking interest (contingent remainders)
Are remainders subject to Rule Against Perpetuities?
Vested remainder subject to open
Contingent remainder
What happens if the contingent remainder does not vest before the preceding estate terminates?
1) Grantor had reversionary interest
2) Grantee’s interest reverts to Grantor
3) Remainderman’s contingent remainder becomes executory interest (springing)
- NO destruction of contingent remainder (modern view)
4) Grantor’s interest passes to Remainderman if ascertained/condition precedent fulfilled
What happens to the contingent remainder if the same person acquires both present and future interests?
Doctrine of merger
- Contingent remainder is merged into present and future interests (contingent remainder is destroyed)
- Acquiring person had reversionary interest => Acquiring person has fee simple
What is the Rule in Shelley’s case?
Grantee’s heirs have NO contingent remainder (common law)
Common law (mostly abolished)
- ‘To A for life, then to A’s heirs’
- A has life estate + contingent remainder (A’s heirs) => Merges into fee simple
- A’s heirs have NO remainder
Modern view
- ‘To A for life, then to A’s heirs’
- A has life estate (NO merger)
- A’s heirs have contingent remainder
What is the Doctrine of Worthier Title?
Grantor’s heirs have NO contingent remainder
- ‘O to A for life, then to O’s heirs/next of kin’
- If A dies => Litigation would arise between O’s devisees by will (arguing O had reversionary interest because O’s heirs had no contingent remainder) vs O’s heirs (arguing O intended to create contingent remainder in O’s heirs - burden of proof is on O’s heirs)
- NOT ‘children’
What is the difference between Rule in Shelley’s Case and Doctrine of Worthier Title?
Rule in Shelley’s Case
- NO contingent remainder (GrantEE’s heirs)
Doctrine of Worthier Title
- NO contingent remainder (GrantOR’s heirs)
What is an executory interest?
1) Transferee’s future interest
2) NOT upon ‘natural’ termination of preceding estate
- Grantor => Grantee (Remainder) OR Transferee (Executory interest)
What is a shifting executory interest?
Divests Grantee’s interest
- Cuts short preceding estate in same disposition
What is a springing executory interest?
Follows gap in possession
- Grantor has reversionary interest
- Transferee has executory interest springing out of Grantor’s reversion (after time gap)
Divests Grantor’s interest
- Grantor has fee simple subject to executory interest
- O to A if A marries B
What is the difference between shifting and springing executory interest?
Shifting executory interest
- Divests Grantee’s interest
Springing executory interest
- Divests Grantor’s interest
- Time gap in possession
What type of present estates can an executory interest be included in?
Defeasible fees
- Naturally terminates upon specified event
Life estates
- Naturally terminates upon end of one’s life
NOT fee simple
- NOT naturally terminate (indefinite duration)
Are executory interests transferrable?
Conveyance
- Most states
- NOT common law
Devise (by will)
- UNLESS survival is condition to taking interest
Descend (by NO will)
- UNLESS survival is condition to taking interest
Are executory interests subject to Rule Against Perpetuities?
Yes
What is the difference between executory interests and contingent remainders?
Executory interest
- NOT destructible
- NOT vested
- NO Rule in Shelley’s Case (Transferee has executory interest)
Contingent remainder
- Destructible
- Can become vested
- Rule in Shelley’s Case (Remaindermen have NO remainder)
Are future interests reachable by creditors?
Yes (nearly all states)
