FUTURE INTERESTS Flashcards
WHAT ARE THE 3 FUTURE INTERESTS CAPABLE OF CREATION IN THE GRANTOR?
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Name the Present Interest that the Future Interest Follows/Accompanies
- POSSIBILITY OF REVERTER
**Accompanies ONLY the Fee Simple Determinable
- THE RIGHT OF ENTRY (AKA power of termination)
**Accompanies ONLY the Fee Simple Subject to Condition Subsequent
- REVERSION
** A Reversion is the future interest that arises in grantor who transfers an estate of lesser quantum than she started with, OTHER THAN a fee simple determinable or a fee simple subject to condition susequent. (Essentially, follows life estate or leashold)
Ex’s: “To A for life”, “To A for 99 years”, “To A for life, then to B for 99 years.” – Grantor has Reversion
WHAT ARE THE 3 TYPES OF FUTURE INTERESTS HELD BY SOMEONE OTHER THAN THE GRANTOR (3RD PARTY)?
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OF THE 3 TYPES, WHICH 2 OF THE FUTURE INTEREST HAS SUB-TYPES AND NAME THOSE SUB-TYPES
If our future interest is held by someone other than Grantor (3rd Party) it HAS to be either:
- VESTED REMAINDER (3 SPECIES):
*INDEFEASIBLY VESTED REMAINDER
*VESTED REMAINDER SUBJECT TO COMPLETE DEFEASANCE (AKA Vested Remainder Subject to Total Divestment)
*VESTED REMAINDER SUBJECT TO OPEN
- CONTINGENT REMAINDER
- EXECUTORY INTEREST (2 SPECIES)
*SHIFTING EXECUTORY INTEREST
*SPRINGING EXECUTORY INTEREST
REMINDER: 3 TASKS IN ASSESSING FUTURE INERESTS IN TRANSFEREES
- We must distinguish vested remainders (of which there are 3 kinds), from contingent remainders
- We must distinguish the 3 kinds of vested remainders from eachother; and
- We must distinguish all remainders from executory interests
THE DIFFERENCE BETWEEN VESTED REMAINDERS & CONTINGENT REMAINDERS:
What is a remainder?
(Remember: Forrest Gump)
*A remainderman is a future interest created in 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.
*A remainderman CANNOT cut short or divest a prior transferee. IF your present estate is a Defeasible Fee, your future interest is NOT a Remainder. (Instead it will be an executory interest; If held by someone other than Grantor)
NOTE - Forrest Gump = Personality trait of Remainder is sociable, patient, and polite:
- Remainderman is sociable. Never travels alone
*Remainderman ALWAYS accompanies a preceding estate of known fixed duration. That preceding estate is usually a life estate or a term of years
(Ex: To A for life, then to B,” or “To A for 10 years, then to B.”
- Remainder is patient and polite.
*Remainderman NEVER follows a defeasible fee
THE DIFFERENCE BETWEEN VESTED REMAINDERS & CONTINGENT REMAINDERS:
A remainder is VESTED if…?
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A remainder is CONTINGENT if…?
VESTED REMAINDER: (NEED BOTH)
- created in an ascertained person; AND
- is NOT subject to any condition precedent
CONTINGENT REMAINDER:
- created in an UNascertained person (Ex: unborn); OR
*Ex’s:
a. “To A for life, then to B’s first child.” A is alive. B, as yet, has no children.
b. “To A for life, then to B’s heirs.” A is alive. B is alive. Because a living person has no heirs, while B is alive his heirs are unknown.
c. “To A for life, then to those children who survive A.” A is alive. We dont yet known which, if any, of B’s children will survive A.
2. is subject to a condition precedent, or both.
*A condition is a condition precedent when it appears before the language creating the remainder or is woven into the grant to remainderman.
Ex’s:
a. To A for life, then, if B graduates from college, to B.” (B has a contingent remainder, G’or has reversion - If B doesnt graduate from college G’or or G’or’s heirs take)
b. To A for life, and, if B has reached the age of 21, to B.” (B has a contingent remainder. G’or has reversion. If B attains the age of 21 during A’s lifetime then B’s contingent remainder is transformed automatically into an indefeasibly vested remainder.)
THE DIFFERENCE BETWEEN VESTED REMAINDERS AND CONTINGENT REMAINDERS:
CONTINGENT REMAINDERS &
- The Rule of Destructibility of Contingent Remainders
- The Rule in Shelley’s Case
- The Doctrine of Worthier Title
The Rule of Destructibility of Contingent Remainders:
C/L: A contingent remainder was destroyed if it was still contingent at the time the preceding estate ended
Ex: “To A for life, and if B has reached the age of 21, to B.” Now, A has died, leaving behind B, who is till only 19.
Note: On essay be a legal historian. Start with: “Historically, at C/L, B’s contingent remainder was destroyed. Thus, G’ors heirs would take in FSA. Modernly,…”
MODERNLY: The Destructibility Rule has been abolished.
Note: Thus, if B is still under 21 when A dies, G’ors heirs hold the estate subject to B’s springing executory interest. Once B reaches 21, B takes.
THE DIFFERENCE BETWEEN VESTED REMAINDERS AND CONTINGENT REMAINDERS:
CONTINGENT REMAINDERS &
- The Rule of Destructibility of Contingent Remainders
- The Rule in Shelley’s Case
- The Doctrine of Worthier Title
The Rule in Shelley’s Case:
C/L: The rule would apply in one setting only –>
Ex: O conveys “To A for life, then, on A’s death, to A’s heirs.” A is alive.
*Historically: The present and future interests merge giving a FSA
NOTE: The Rule in Shelley’s Case IS a rule of law and NOT a rule of construction
MODERNLY: The Rule in Shelley’s Case has been virtually abolished.
Ex: Thus, today, when G’or conveys “To A for life, then to A’s heirs”
*A has a life estate, A’s as yet unknown heirs have a contingent remainder, G’or has reversion, since A could die w/out heirs.
THE DIFFERENCE BETWEEN VESTED REMAINDERS AND CONTINGENT REMAINDERS:
CONTINGENT REMAINDERS &
- The Rule of Destructibility of Contingent Remainders
- The Rule in Shelley’s Case
- The Doctrine of Worthier Title
Note: AKA Rule against a remainder in G’ors heirs.
*The Doctrine is still viable in most states today. It applies when G’or, who is alive, tries to create a future interest in his heirs
Ex: G’or, who is alive, conveys “To A for life, then to G’ors heirs.”
-If the Doctrine of Worthier Title did NOT apply: A would have a life estate and G’ors heirs have a contingent remainder (b/c G’or is still alive and a living person has no heirs.)
–>Instead, because of the Doctrine of Worthier Title, the contingent remainder in G’ors heirs is void. Thus, A has a life estate and G’or has reversion.
**Policy/Purpose: To promote the free transfer of land
**The G’ors intent controls. If the G’or clearly intends to create a contingent remainder in his heirs, that intent IS binding (b/c D of WT is rule of construction NOT law.)
NOTE: The Doctrine of Worthier Title IS a rule of construction and NOT a rule of law
DISTINGUISH THE 3 KINDS OF VESTED REMAINDERS:
What are the 3 kinds of vested remainders?
- INDEFEASIBLY VESTED REMAINDER
- VESTED REMAINDER SUBJECT TO COMPLETE DEFEASANCE (AKA Vested Remainder Subject to Total Divestment)
- VESTED REMAINDER SUBJECT TO OPEN
NOTE: ONLY REMAINDERS CAN BE VESTED
