Future interests Flashcards
Categories of future interests
Future interests capable of creation in the grantor
- Possibility of reverter
- Right of entry (a.k.a. power of termination)
- Reversion
Future interests in transferees
- Vested remainder
- Contingent remainder
- Executory interest
Possibility of reverter accompanies…
Fee simple determinable
Right of entry accompanies…
Fee simple subject to condition subsequent
Reversion
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).
Categories of future interests capable of creation in the grantor
- Possibility of reverter
- Right of entry (a.k.a. power of termination)
- Reversion
Categories of future interests in transferees
- Vested remainder
- Contingent remainder
- Executory interest
Types of vested remainder
- Indefeasibly vested remainder
- Vested remainder subject to complete defeasance/total divestment
- Vested remainder subject to open
Types of executory interest
- Shifting
2. Springing
What is a remainder?
A future interest created in a grantee that is:
- capable of becoming possessory upon the expiration of a prior possessory estate
- created in the same conveyance in which the remainder is created.
Remainderman personality
- Sociable
2. Patient and polite
Remainderman is sociable
Remainderman never travels alone.
Always accompanies a preceding estate of KNOWN, FIXED DURATION.
- Usu. a life estate or term of years.
Remainderman is patient and polite
Remainderman waits patiently for the present estate to end—never follows a defeasible fee.
Remainderman cannot cut short or divest a prior transferee.
Vested remainder
Remainder is vested if it is BOTH:
- created in an ascertained person, and
- is NOT subject to a condition precedent
Contingent remainder
Remainder is contingent if it is EITHER:
1. created in an unascertained person, or
2. subject to a condition precedent
(or both).
Condition precedent
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
Rule of destructibility of contingent remainders
- 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.
- 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.
Rule in Shelley’s Case
O conveys “To A for life, then, on A’s death, to A’s heirs.” A is alive.
- 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.
- 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).
Doctrine of worthier title
(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.
Types of vested remainders
- Indefeasibly vested remainder
- Vested remainder subject to complete defeasance/total divestment
- Vested remainder subject to open
Indefeasibly vested remainder
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.
Vested remainder subject to complete defeasance/total divestment
- Remainderman exists.
- No condition precedent
- 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).
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 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.
Vested remainder subject to open
A remainder is vested in a group of takers,
- at least one of whom is qualified to take,
- 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.
A class is open if:
Others can still join.
