Future Interests

Question 1

What are the 3 types of future interest capable of creation in the grantor?

Answer 1

(1) Possibility of Reverter, which is ONLY accompanied by the fee simple determinable (2) Right of Entry (synonymous with power of termination), which is ONLY accompanied by the fee simple subject to condition subsequent (3) Reversion, which arises when the grantor transfers less than what he started with -EX: “To A for life.” O has conveyed less than what she started with because O had a fee simple absolute and only transferred A a life estate. Therefore, O has a reversion.

Question 2

What are the 3 types of future interests that are created in a transferee (aka someone other than the grantor)?

Answer 2

1. Vested Remainder
2. Contingent Remainder
3. Executory Interest

Question 3

What are the 3 types of Vested Remainders?

Answer 3

1. Indefeasibly Vested Remainder - the holder of this remainder has “no strings attached” and is certain to acquire an estate in the future no matter what.
   
   • Ex: “To A for life, remainder to B.” A is alive. B is alive.
     
     • A has: life estate
     • B has: indefeasibly vested remainder.
2. Vested Remainder Subject to Complete Defeseance (aka subject to complete forfeiture) - the holder of this remainder is has a string attached, namely the condition subsequent.
   
   • Ex: O conveys, “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.
     
     • A has: life estate
     • B has: vested remainder subject to complete defeasance
     • C has: shifting executory interest
     • If B is under 25 at the time A dies: B still takes.
     • BUT, B must live to 25 in order for his estate to retain interest, otherwise B’s heirs lose, and C or C’s heirs take.
     • O has: a reversion, because it is possible that C nor C’s heirs will exist if and when the condition is breached.
3. Vested Remainder Subject to Open - the holder of this remainder is vested in a group of takers, at least one of whom is qualified to take
   
   • each class member’s share could be diminished because additional members can still join.
     
     • Ex: “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 (because B can still have more kids, which would diminish C and D’s shares.

Question 4

What is a Vested Remainder?

Answer 4

a remainder created in both (a) an ascertained person, and (b) is not subject to any condition precedent.

Question 5

What is a Contingent Remainder?

Answer 5

a remainder created in (a) an unascertained person or (b) is subject to a condition precedent