Future Interests Flashcards
What is a future interest and what are the types
A future interest gives the holder the right or possibility of future possession of an estate.
Future Interests in Transferor:
1) possibility of reverter
2) right of re-entry
3) reversion
Future Interests in Third Party
1) contingent remainder
2) vested remainder (three types)
3) executory interest (two types)
Possibility of Reverter
The possibility of reverter accompanies a fee simple determinable
Right of re-entry
The right of re-entry accompanies a fee simple subject to condition subsequent
Reversion
A reversion is the estate left in a grantor who conveys less than they own, other than a fee simple determinable and fee simple subject to condition subsequent
the reversion arises by operation of law and does not have to be expressly reserved
a reversion is transferable, devisable, and descendible
NOTE - the holder can sue for waste and for tortious damage to the reversionary interest
What is a remainder
A remainder is a future interest in a third person that can become possessory on the natural expiration of the preceding estate. It cannot divest a prior estate and cannot follow a time gap.
A remainder must be expressly created in the instrument creating the preceding possessory estate.
Remainders are either contingent or vested
Contingent Remainder
A remainder is contingent if
1) it is created in unborn or unascertainable persons; or
2) its subject to a condition precedent (or both)
Vested Remainders and their types
A vested remainder is one created in an existing and ascertained person, and not subject to a condition precedent.
There are three types
1) indefeasibly vested remainder
2) vested remainder subject to total divestment
3) vested remainder subject to open
Indefeasibly Vested Remainder
An indefeasibly vested remainder is a vested remainder that is not subject to divestment or diminution
The holder is certain to acquire the estate in the future, with no strings or conditions attached.
Vested Remainder Subject to Total Divestment
This is a vested remainder that is subject to a condition subsequent - meaning his right to possession could be cut short by a condition subsequent
EX: To A for life, then to B, provided, however, that if B dies under the age of 25, to C.
Vested Remainder Subject to Open
This is a vested remainder created in a class of persons that is certain to become possessory, but is subject to diminution (others may join the class)
What is a class gift
A class is a group of persons having common characteristics.
The share of each member is determined by the number of person in the class
A class gift of a remainder can either be vested subject to open or contingent (depending on if there is a member of the class that can take)
Rule of Convenience
A class is open when it is still possible for others to take. However, a class closes when some member of the class can call for distribution of their share of the class gift.
Womb Rule Exception - persons in gestation at the time the class closes are included in the class
Survival for Class Gifts
Survival of a class member to the time of closing is usually unnecessary to share in a future gift, unless survival was made an express condition (to A for life, then to her surviving children)
What is an executory interests and the types
Executory interests are future interests in third parties that either divest a transferees preceding estate or follow a gap in possession or cut short a grantor’s estate
Executory interests must take effect by cutting short some interest, either in another person or in the grantor or his heirs
Types
1) Shifting executory interest
2) springing executory interest
Shifting Executory Interest
A shifting executory interest always follows a defeasible fee and cuts short someone other than the grantor
EX: To A, but if B returns from Canada, to B and his Heirs
