Future interests

Question 1

Categories of future interests

Answer 1

Future interests capable of creation in the grantor

1. Possibility of reverter
2. Right of entry (a.k.a. power of termination)
3. Reversion

Future interests in transferees

4. Vested remainder
5. Contingent remainder
6. Executory interest

Question 2

Possibility of reverter accompanies…

Answer 2

Fee simple determinable

Question 3

Right of entry accompanies…

Answer 3

Fee simple subject to condition subsequent

Question 4

Reversion

Answer 4

Future interest that arises in a grantor who transfers and estate of lesser quantum than she started with (other than a fee simple determinable or a fee simple subject to condition subsequent).

Question 5

Categories of future interests capable of creation in the grantor

Answer 5

1. Possibility of reverter
2. Right of entry (a.k.a. power of termination)
3. Reversion

Question 6

Categories of future interests in transferees

Answer 6

4. Vested remainder
5. Contingent remainder
6. Executory interest

Question 7

Types of vested remainder

Answer 7

1. Indefeasibly vested remainder
2. Vested remainder subject to complete defeasance/total divestment
3. Vested remainder subject to open

Question 8

Types of executory interest

Answer 8

1. Shifting

2. Springing

Question 9

What is a remainder?

Answer 9

A future interest created in a grantee that is:

1. capable of becoming possessory upon the expiration of a prior possessory estate
2. created in the same conveyance in which the remainder is created.

Question 10

Remainderman personality

Answer 10

1. Sociable

2. Patient and polite

Question 11

Remainderman is sociable

Answer 11

Remainderman never travels alone.

Always accompanies a preceding estate of KNOWN, FIXED DURATION.

• Usu. a life estate or term of years.

Question 12

Remainderman is patient and polite

Answer 12

Remainderman waits patiently for the present estate to end—never follows a defeasible fee.

Remainderman cannot cut short or divest a prior transferee.

Question 13

Vested remainder

Answer 13

Remainder is vested if it is BOTH:

1. created in an ascertained person, and
2. is NOT subject to a condition precedent

Question 14

Contingent remainder

Answer 14

Remainder is contingent if it is EITHER:
1. created in an unascertained person, or
2. subject to a condition precedent
(or both).

Question 15

Condition precedent

Answer 15

A condition is a condition precedent when it appears before the language creating the remainder or is woven into the grant to remainderman.

• a.k.a. prerequisite to taking

Question 16

Rule of destructibility of contingent remainders

Answer 16

1. At common law, a contingent remainder was destroyed if it was still contingent at the time the preceding estate ended. Then, the contingent remainder was destroyed, and O or O’s heirs would take in fee simple absolute.

E.g., “To A for life, and if B has reached age 21, to B.” A dies, and B is only 19. B’s contingent remainder was destroyed.

2. Today, the destructibility rule has been abolished.

E.g., Thus, in the example above, O or O’s heirs would hold the estate subject to B’s springing executory interest. Once B reaches 21, B takes.

Question 17

Rule in Shelley’s Case

Answer 17

O conveys “To A for life, then, on A’s death, to A’s heirs.” A is alive.

1. At common law, the present and future interests merge, giving A a fee simple absolute. Rule was a rule of law, not construction, so it would apply even with contrary grantor intent.
2. Today, rule has been virtually abolished. A has a life estate; A’s heirs have a contingent remainder; O has a reversion (since A could die without heirs).

Question 18

Doctrine of worthier title

Answer 18

(a.k.a. “rule against a remainder in grantor’s heirs”)

Applies when O, who is alive, tries to create a future interest in his heirs.

E.g., O, who is alive, conveys “To A for life, then to O’s heirs.” The contingent remainder in O’s heirs is void. A has a life estate; O has a reversion.

• Rule of construction, not a rule of law, so grantor’s intent controls.

Question 19

Types of vested remainders

Answer 19

1. Indefeasibly vested remainder
2. Vested remainder subject to complete defeasance/total divestment
3. Vested remainder subject to open

Question 20

Indefeasibly vested remainder

Answer 20

The holder of the remainder is certain to acquire an estate in the future, with no strings attached.

E.g., “To A for life, remainder to B.” A and B are alive. A has a life estate; B has an indefeasibly vested remainder.

Question 21

Vested remainder subject to complete defeasance/total divestment

Answer 21

1. Remainderman exists.
2. No condition precedent
3. BUT right to possession could be cut short because of a CONDITION SUBSEQUENT.

E.g., “To A for life, remainder to B, provided, however, that if B dies under the age of 25, to C.” A is alive; B is 20.
– B has a vested remainder subject to complete defeasance
– If B is under 25 at A’s death, B still takes; however, B must live to 25 for his estate to retain his interest.
– A has a life estate; C has a shifting executory interest; O has a reversion (because it’s possible that neither C nor C’s heirs will exist if/when the condition is breached).

Question 22

Comma rule

Answer 22

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 there is a vested remainder subject to complete defeasance.

By contrast, if the conditional language appears before the language creating the remainder, the condition is a condition precedent, and there is a condition remainder.

Question 23

Vested remainder subject to open

Answer 23

A remainder is vested in a group of takers,

1. at least one of whom is qualified to take,
2. but each class member’s share is subject to partial diminution because additional members can still join in.

E.g., “To A for life, then to B’s children.” A is alive. B has two children, C and D. C and D have vested remainders subject to open.

Question 24

A class is open if:

Answer 24

Others can still join.

Question 25

A class is closed when:

Answer 25

NO others can join.

Question 26

When is a class closed?

Answer 26

Whenever any member can demand possession (common law rule of convenience).

Question 27

Rule of convenience

Answer 27

A class closes whenever any member can demand possession.

Question 28

Womb rule

Answer 28

A child in the womb will share in the class.

Question 29

Executory interests

Answer 29

A future interest created in a transferee (3d party),

1. which is not a remainder, and
2. which takes effect by either cutting short some interest in another person (“shifting”) or in the grantor or his heirs (“springing”).

Question 30

Shifting executory interest

Answer 30

Follows a defeasible fee and cuts short someone other than the grantor.

E.g., “To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs.” B has a shifting executory interest.

Question 31

Springing executory interest

Answer 31

Cuts short O, the grantor.

E.g., “To A, if and when he marries.” A is unmarried. A has a springing executory interest. O has a fee simple subject to A’s springing executory interest.

Question 32

Rule against perpetuities

Answer 32

Certain future interests are void if there is ANY POSSIBILITY, however remote, that the interest may vest more than 21 years after the death of a measuring life.

• Except charity-to-charity gifts.

Question 33

Rap applies to…

Answer 33

ONLY

1. Contingent remainders
2. Executory interests
3. Some vested remainders subject to open.

Question 34

Rap analysis

Answer 34

1. Classify the future interest
2. What are the conditions precedent to the vesting of the future interest
3. Find a measuring life
4. Will we know, with certainty, within 21 years of the death of the measuring life, if a future interest holder can take?

Question 35

Measuring life

Answer 35

A person:

1. alive at the date of the conveyance
2. whose life or death is relevant to the condition’s occurrence.

Question 36

Bright-line rules of rap

Answer 36

1. A gift to an open class that is conditioned on the members surviving to an age beyond 21 violates the rap.
– "Bad as to one, bad as to all."  If a disposition might vest too remotely for ANY member of the class, the entire class gift is void.

2. Many shifting executory interests violate the rap. An executory interest with no limit on the time within which it must vest violates the rap.
   – E.g., “To A and his heirs so long as the land is used for framing, and if the land ceases to be so used, to B and his heirs.”
   – Strike offending future interest
   – E.g., in the example above > “To A and his heirs so long as the land is used for farming.”
   – If grammatically incorrect, strike the entire conditional clause.

Question 37

Charity-to-charity exception

Answer 37

A gift from one charity to another does not violate the rap.

Question 38

Rap reforms

Answer 38

1. Wait and see, or second look doctrine (majority).
2. Uniform Statutory Rule Against Perpetuities
3. Cy pres doctrine
4. Age reduction

Question 39

Wait and see, or second look doctrine

Answer 39

Rap reform effort that determines the validity of any suspect future interest on the basis of facts as they exist at the end of the measuring life.

• Embraces the cy pres doctrine and the reduction of any offensive age contingency to 21 years.

Question 40

Uniform Statutory Rule Against Perpetuities

Answer 40

Codifies the common law rap and provides an alternative 90-year vesting period.

• Embraces the cy pres doctrine and the reduction of any offensive age contingency to 21 years.

Question 41

Cy pres doctrine

Answer 41

“As near as possible.”

If a given disposition violates the rap, a court may reform it in a way that most closely matches the grantor’s intent while still complying with the rap.