Future Interests

Question 1

What is a future interest?

Answer 1

An ownership interest in presently existing property which may commence in possession or enjoyment sometime in the future

Question 2

What are the 5 types of future interests?

Answer 2

1. Reversion
2. Possibility of reverter
3. Right of reentry
4. Remainder
5. Executory interests

Question 3

What is a reversion?

Answer 3

a FI held by a grantor who transfers a LE or estate for years w/out conveying the remianing FI to a thrid party

Question 4

Is a reversion subject to RAP?

Answer 4

NO

Question 5

Is a reversion alienable, devisable, and descendible?

Answer 5

Yes

Question 6

What is a possibility of reverter

Answer 6

A FI retained by a grantor when a FSD is conveyed

Question 7

Is a possibility of reverter alienable, devisable, and descendible?

Answer 7

Yes

Question 8

What is a right of reentry?

Answer 8

a FI retained by a grantor afer a FSSCS is granted

Question 9

Is a right of entry alienable?

Answer 9

CL - no inter vivos transfer

Some states - permitted

Question 10

Is a right of entry devisable and descendible?

Answer 10

Yes, in most states

Question 11

What is a remainder

Answer 11

A FI that becomes possessory upon the natural expiration of a prior estate that is created in the same conveyance in which the remainder is created

Question 12

What is a vested remainder

Answer 12

one that is not subject to any conditions precedent

there is an ascertainable grantee

Question 13

?????What is a vested remainder subject to open? (class gifts)

Answer 13

If at least one class member is qualified to take possession at the time of the conveyance, each class member’s share is subject to partial diminution b/c additional takers not yet ascertained can still vest

Question 14

What is a class gift?

Answer 14

a group of unspecified persons whose number, identity, and share of the interest is determined in the future

Question 15

What happens when a class (part of a class gift) closes?

Answer 15

Any person who might otherwise have become a class member cannot claim an interest in the property as a class member

Question 16

Rule of convenience

Answer 16

closes the class when any class member is entitled to immediate possession

Question 17

What is a vested remainder subject to complete divestment?

Answer 17

when the occurrence of a condition subsequent will divest the remainder

Question 18

What is a contingent remainder?

Answer 18

remainder created in

1. an ascertainable grantee OR
2. is subject to an express condition precedent to grantee’s taking (ex. unknown beneficiary OR known beneficiary subject to condition precedent that has not yet occurred)

Question 19

What is a survivorship contingency?

Answer 19

Majority Rule: applies at the termination of interest that precedes remainder

Minority: requires surviving the testator, NOT surviving the life tenant

Question 20

What are executory interests?

Answer 20

A FI in a third party that cuts the prior estate short upon the occurence of a specified condtion

Question 21

Are EI subject to RAP?

Answer 21

Yes

Question 22

Are EI transferable?

Answer 22

Yes, (alienable?)

Question 23

What is a shifting EI?

Answer 23

it cuts short a prior estate created in the same conveyance - the estate shifts from one grantee to another grantee upon the happening of a condition

Question 24

What is a springing EI?

Answer 24

it divests the grantor’s interest or fills a gap in possession in which the estate reverts to the grantor

Question 25

Are EI devisable and deescendible?

Answer 25

Yes

Question 26

Is a remainder transferable?

Answer 26

Yes, inter vivos

Question 27

Is a remainder devisable/descendible?

Answer 27

Yes

Question 28

Is a remainder subject to RAP?

Answer 28

Some are 1. contingent remainders 2. vested remainders subject to open

Question 29

What is the Rule Against Perpetuities (RAP)

Answer 29

specific FIs are valid ONLY IF they must vest or fail by the end of a life in being plus 21 years

Question 30

RAP applies to which FIs?

Answer 30

1. contingent remainders 2. vested remainders subject to open 3. executory interest 4. powers of appointment 5. rights of first refusal 6. options

Question 31

Which FIs does RAP NOT apply to?

Answer 31

In general, FIs that revert to the grantor 1. reversion 2. possibility of reverter 3. right of reentry

Question 32

Can there be more than one measuring life for RAP?

Answer 32

Yes, but must be human life

Question 33

What if there is no measuring life specified?

Answer 33

The measuring life is the life directly related to the FI that is subject to RAP

Question 34

How to test whether it will vest or fail

Answer 34

If there is ANY possibility that it will NOT be known whether the interest will vest or fail w/in the applicable period, then RAP has NOT been satisfied **think of a story, someone having a child then dying

Question 35

What happens when RAP is violated

Answer 35

only the offending interest fails, except in rare cases when voiding the FI undermines the grantor's intent

Question 36

What is the special rule for class gifts/RAP

Answer 36

"bad as to one, bad as to all" If RAP voids a transfer to ANY class member, then the transfers void as to ALL class members, even those whose interests have already vested

Question 37

How does the rule off convenience affect RAP

Answer 37

CAN prevent the application of RAP to a class transfer, but the application of the RoF to a class transfer does NOT AUTOMATICALLY forestall the application of RAP

Question 38

???? Exceptions

Answer 38

transfers of a specific dollar amount to each class member transfer to a subclass that vests at a specific time

Question 39

What are common RAP violations?

Answer 39

1. survival beyond age 21 condition 2. fertile octogenaraian 3. unborn spouse 4. defeasible fee followed by executory interest 5. conditional passage of an interest