Future Interests Flashcards
What is a future interest? What are the three types of future interests retained by the grantor? The three types retained by someone other than the grantor?
A future interest is a present legally protectable interest that gives the holder right to future possession of an estate.
Future interests are either held by the original grantor or someone else.
The future interests held by the original grantor are (a) possibility of reverter (b) right of entry and (c) a reversion.
The future interest held by someone else are (a) contingent remainder (b) vested remainder and (c) executory interest.
What is the possibility of reverter?
A possibility of reverter accompanies a fee simple determinable. When someone conveys a property interest to someone else and upon a certain condition occurring that interest will automatically revert to the original grantor.
What is the right of entry?
A right of entry accompanies a fee simple subject to condition subsequent. In this interest, someone conveys the estate to someone else and upon a condition occurring the grantor will have the right to re-enter. The interest does not automatically transfer - the grantor must exercise the right first.
What is a reversion?
A reversion occurs when a grantor transfers an estate for shorter duration than they own it (and nothing indicates a right to entry or possibility of reverter). Upon duration ending, the property will revert to them.
note: need not be explicit, is implied by law
Reversion is transferable, devisable, and inheritable.
What is a contingent remainder?
A contingent remainder is the future interest of a third party in situations when someone conveys an estate to someone and then either (a) gives the future interest in property to an unborn or unascertained person OR (b) gives the future interest in the property to someone that is subject to a condition precedent.
E.g. O conveys to A for life then to B’s first child/B’s heirs (Note: heirs are considered unknown until person dies)
E.g., O conveys to A for life, then to B if B graduates college
Note: must be express
Who has the future interest if “O grants to A for life then to the heirs of O”?
Under the Doctrine of Worthier Title, courts construe this to mean that O has a reversion unless intent otherwise is clearly manifested.
What is a vested remainder? What are the three types?
A vested remainder is one that is created in an existing and ascertainable person and is not subject to a condition precedent. The three types are as follows:
- indefeasibly vested remainder
- vested remainder subject to total divestment (aka vested remainder subject to complete defeasance)
- vested remainder subject to open
What is an indefeasibly vested remainder?
An indefeasibly vested remainder is a vested remainder not subject to divestment or diminution, i.e. holder is certain to acquire the estate with no conditions attached.
E.g. “to A for life, remainder to B”
What is a vested remainder subject to total divestment/complete defeasement?
The vested remained subject to total divestment is a vested remainder that is subject to a condition subsequent. That is, there is an existing and ascertainable remainderman whose rights are not subject to a condition precedent BUT his possession could be cut short by a condition subsequent.
E.g., to A for life, then to B and his heirs, but if B dies unmarried then to C
What is a vested remainder subject to open?
A vested remainder subject to open is a vested remainder that is created in a class of persons that is certain/existing at the time BUT subject to diminution. That is, more of the class could be created so they could get reduction in percentage.
E.g. to A for life then to B’s children (B has children at the time of creation but could have more)
What is the vested remainder called when a class is open vs closed? How do we determine when a class is closed?
An open class is one in which more members may still join/be made. A closed class is one in which no more can join. If the class is open, then the vested remainder is the vested remainder subject to open. If the class is unascertained – i.e. no members exist – its a contingent remainder. If the class is closed then its an indefeasibly vested remainder.
Use the rule of convenience to determine whether a class is closed or open. Under the rule of convenience, when any member can demand possession of the class gift, the class is closed.
Note: survival of all class members is not req’d for possession to pass to class unless explicitly stated
What is an executory interest? What are the two types?
An executory interest is a future interest held by a third party that cuts short either the (a) grantor’s estate or (b) a transferee’s estate.
(A) a springing executory interest is one that cuts short the grantor’s estate (e.g. “from O to A for life and then to B if and when she becomes a lawyer” if A dies before B becomes lawyer, goes back to O then springs to B)
Note: always follows a defeasible fee
(B) a shifting executory interest is one that cuts short the transferee’s estate (e.g. “to A but if B returned from Canada, to B”)
Are contingent and vested remainders transferable, descendible, and divisable?
Yes.
Note: anything transferable = reachable by creditors
