Future Interests

Question 1

list the types of future interests

Answer 1

(1) future interest held by transferor
— possibility of reverter
– right of entry
– reversion

(2) future interest held by someone other than the transferor
– contingent remainder
– vested remainder
– executory interest

Question 2

what is a reversion

Answer 2

a reversion arises by operation of law whenever a grantor transfers an estate of lesser duration than what they started with [other than instances giving rise to POR or right of entry]

ex: O to A for 99 years. O has a reversion.

ex: O to A for life years then to B for 99 years. O has a reversion

ex: O to A for life. O has a reversion

Question 3

characteristics of reversion

Answer 3

transferable

devisable by will

inheritable

holder of reversion can sue for waster and tortious damage to the reversionary interest

Question 4

are reversions subject to RAP?

Answer 4

No - they are vested

Question 5

types of vested remainders

Answer 5

indefeasibly vested remainder

vested remainder subject to complete defeasance/total divestment

vested remainder subject to open

Question 6

types of executory interests

Answer 6

shifting

springing

Question 7

what is a remainder, in general

Answer 7

future interest in a third person that may become possessory on the natural expiration of the preceding estate

cannot divest a prior estate

cannot follow a time gap after the preceding estate

must be expressly created in the instrument creating the preceding possessory estate

Question 8

types of remainders

Answer 8

vested

contingent

Question 9

O to A for life, then to B and his heirs on day after A’s death. what does B have?

Answer 9

B does not have a remainder because there is a gap [B has an executory interest]

Question 10

what can remainders never follow

Answer 10

fee simples

Question 11

what is a contingent remainder

Answer 11

A remainder is contingent if:

(1) it is created in unborn or unascertained persons

[O to A for life, then to B’s first child — A is alive. B has no children yet. Remainder is contingent on B’s first child being born.]

or

(2) it is subject to a condition precedent
— note that the condition typically appear BEFORE the language creating the remainder

[O to A for life, then, if B graduates for college, to B. A is alive. B is in high school. B’s interest is contingent on his graduating from college]

or

(3) both (1) and (2)

[so a remainder may be contingent as to a person or event]

Question 12

O to A for life, then, if B graduates from college, to B. B is in high school.

what does B have?

what does B have if he graduates from college during A’s lifetime?

Answer 12

B has a contingent remainder subject to condition precedent

if B graduates from college during A’s lifetime, B has an indefeasibly vested remainder

Question 13

technical rules of the common law that do not apply in VA or in most places, but may appear as wrong answers on the MBE

explain what happens if these rules have been abolished in Virginia / other states

Answer 13

(1) destructibility of contingent remainders
COMMON LAW: a contingent remainder was destroyed if it failed to vest before or upon the termination of the preceding freehold estate

VIRGINIA/OTHER STATES: a contingent remainder that fails to vest before or upon termination of preceding estate is converted to an executory interest upon the death of the preceding tenant [O will have a reversionary estate and then be divested when the remainder vests]

-

(2) Rule in Shelley’s case / rule against remainders in grantee’s heirs

COMMON LAW: if same instrument created a life estate in A and gave the remainder only to A’s heirs, the remainder was not recognized and the took the life estate and the remainder

VIRGINIA/OTHER STATES: a conveyance from O to A for life with the remainder to A’s heirs is given effect as written

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(3) doctrine of worthier title / rule against remainders in grantor’s heirs

COMMON LAW: a remainder in the grantor’s heirs is invalid and becomes a reversion in the grantor. This doctrine is treated as a rule of construction in which it does not apply if an intent to create a remainder in heirs has been clearly manifested. Also, it only applies to intervivos transfers, not wills, and only if the word “heirs” is used

VA and most states: abolish this rule

Question 14

what is a vested remainder

Answer 14

a remainder created in an existing and ascertained person and not subject to a condition precedent

Question 15

what is an indefeasibly vested remainder

Answer 15

A vested remainder that is not subject to divestment or diminution

the holder is certain to acquire an estate in the future with no strings or conditions attached

To A for life, remainder to B. Both A and B are alive.

—- A has a life estate
—– V has an indefensibly vested remainder

Question 16

To A for life, then to B.

what does B have?

what if B predeceases A?

Answer 16

B has an indefeasibly vested remainder

if B predeceases A, his vested remainder will pass by will or intestacy

Question 17

what is a vested remainder subject to total divestment / complete defeasance

Answer 17

vested remainder subject to condition SUBSEQUENT

idea is that the remainder man’s right to possession may be cut short because of a condition subsequent

“To A for life, then to B and his heirs; but if B dies unmarried, then to C and his heirs.” B is alive and unmarried.

—- B has a vested remainder subject to total divestment by C’s executory interest

Question 18

how to distinguish between condition subsequent and precedent?

Answer 18

condition precedent - creates a contingent remainder

condition subsequent - creates a vested remainder subject to total divestment

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COMMA RULE:

when conditional language in a transfer follows language that, taken alone and set off by commas, would create a vested remainder, the condition is a condition subsequent, and you have a vested remainder subject to complete defeasance

To A for life, then to B and his heirs; but if B dies unmarried, to C and his heirs”

“To A for life, then to B, provided, however, that if B dies under the age of 25, to C.”

Question 19

where language is ambiguous re: conditions subsequent and condition precedent, what do courts do?

Answer 19

courts prefer vested remainders subject to divestments rather than contingent remainders or executory interests

Question 20

what is a vested remainder subject to open

Answer 20

vested remainder created in a class of persons that is certain to become possessory but is subject to diminution, for example, by the birth of another who will share in the remainder as a class

idea is that there is one group member who is qualified to take possession, but that person’s share might get smaller due to the addition of more people, not yet ascertained, who may join the class

To A for life, then to B’s children. A is alive, B has two children, C and D.
— A has a life estate
— C and D have a vested remainder subject to open

Question 21

what is a class? [re: class gifts]

Answer 21

group of persons having a common characteristic [children, sisters, etc.]

Question 22

how to determine class gift shares

Answer 22

the share of each member of the class is determined by number of people in the class

Question 23

what kind of remainders may class gifts be?

Answer 23

contingent, where ALL group members are unascertained

vested subject to open, when at least one group member exists

Question 24

when does a class close for the purpose of class gift?

Answer 24

class closes when no others can join in

RULE OF CONVENIENCE — in the absence of express contrary intent, a class closes when some member of the class can call for distribution of their share of the class gift / is eligible to demand possession

Question 25

To A for life, then to B’s children.

A is alive. B has two children. When does the class close?

Answer 25

When A dies or B dies

if A dies, a child of B born after will not share in the gift

when B dies, B will have no more children

Question 26

womb rule

Answer 26

persons in gestation at the time the class closes are included in the class

Question 27

T’s will gives his estate to those of A’s children who attain age 21

vs.

To A for life, then to such of A’s children who attain age 21

Answer 27

(1) if any of A’s children is 21 at T’s death, the class closes at that time. otherwise it closes when one of A’s children reaches 21.

(2) the class remains upon till A dies.

Question 28

discuss survival in the context of class gifts

Answer 28

survival is generally not necessary to share in a future gift unless survival is made an express condition (to A for life and then to her surviving children)

but some terms will be construed to create implied survivorship conditions – widow, issue, heirs, next of kin

under anti-lapse statutes, a gift will be saved for th party’s descendants even if there is an express survival contingency

Question 29

what are executory interests

Answer 29

future interests in third parties that either divest a transferee’s preceding freehold estate (shifting) or follow a gap in possession or cut short a grantor’s estate (springing)

Question 30

shifting vs. springing executory interest

Answer 30

shifting
– cuts short some interest in another person
— always follows a defeasible fee

“To A, but if B returns from Canada, to B and his heirs.” B has a shifting executory interest because his interest divests A’s interest.
- note that A has a fee simple subject to B’s shifting executory interest

-

springing
– cut short som interest in the grantor or grantor’s heirs

“To A, if and when she becomes a lawyer.” A is in high school. A has a springing executory interest because if she becomes a lawyer she may divest O.

Question 31

O to A and his heirs when A marries B.

what does A have?

Answer 31

A has a springing executory interest because if and when she marries B she will divest O, the grantor

Question 32

O to A for life, then to B and his heirs, but if B predeceases A, then to C and his heirs.

what does C have

Answer 32

C has a shifting executory interest because C will divest B of B’s interest if B predeceases A

Question 33

any future interest that is transferable is subject to:

Answer 33

creditor’s reaching it

Question 34

transferability of remainders

Answer 34

vested remainders a fully transferable, descendible by intestacy, and devisable by will

moder day court say that contingent remainders and executory interests are transferable intervivos, descendable, and divisible, provided that survival is not a condition to the interest’s taking