Future Interests: 3rd Parties (Remainders and Executory Interests) Flashcards
What are the possible future interests in 3rd parties?
- Remainders
(i) Indefeasibly Vested Remainder
(ii) Vested Remainder Subject to Open
(iii) Vested Remainder Subject to Total Divestment
(iv) Contingent Remainder - Executory Interest
(i) Shifting Executory Interest
(ii) Springing Executory Interest
What is a “remainder”?
What rules accompany it?
What are examples?
A “remainder” is a
- future interest in 3rd party;
- that can become POSSESSORY on the NATURAL EXPIRATION of the preceding estate
Example –> “to A for life, then to B and his heirs”
Result –> B has a remainder
NOTE:
1. it CANNOT divest a prior estate; AND
2. it CANNOT follow a time gap after preceding estate
NO good –> “to A for life, then to B and his heirs 1 day after A’s death”
3. it MUST be EXPRESSLY created in the instrument
What is an “Vested Remainder”?
What is a “Contingent Remainder”?
A remainder is Vested if it goes to:
- EXISTING and ASCERTAINED persons; AND
- NOT subject to a condition precedent
EXAMPLE –> “A for life, remainder to B” (assuming both parties are alive)
A remainder is Contingent if it goes to:
1. UNBORN or UNASCERTAINED persons; OR
EXAMPLE –> “to A for life, then to the children of B” (if B is childless, remainder is contingent)
- is subject to a CONDITION PRECEDENT
EXAMPLES –> - “A for life, then to B and his heirs IF B marries C” (B’s remainder is contingent bc he must marry C)
- “A for life, then to B and his heirs IF B marries C, otherwise to D and his heirs”
(B and D have alternative contingent remainders)
COMPARE :
“A for life, then to B and his heirs; but if B marries C, then to D and his heirs”
B has a vested remainder subject to total divestment by D’s executory interest (bc there is no condition precedent)
What is an “Indefeasibly Vested Remainder”?
Example?
“Indefeasibly Vested Remainder” =
- EXISTING and ASCERTAINED persons;
- NOT subject to CONDITION PRECEDENT
- NOT subject to DIVESTMENT or DIMINUTION
Example –> “To A for life, then to B”
What is a “Vested Remainder Subject to Open”?
What is an example?
What issues arise?
“Vested Remainder Subject to Open” = a vested remainder that is CERTAIN to become possessory, but is SUBJECT to DIMINUTION (for example, by the birth of additional persons who will share in the remainder as a class)
Example –>
“to A for life, then to the children of B”
- if A and B are living, and B has one child (C), then see has a vested remainder subject to open
Issue (See other card)
- When does a class close?
- What if class member dies before closing?
What is a “Vested Remainder Subject to Total Divestment”?
What is an example?
“Vested Remainder Subject to Total Divestment” = a vested remainder that is subject to a CONDITION SUBSEQUENT
Example –>
“to A for life, then to B and his heirs; but if B dies unmarried, then to C and his heirs”
- B has a vested remainder subject to complete divestment by C’s executory interest
What is the exam tip where language is ambiguous ?
Policy favors the vesting of estates.
If language is ambiguous, preference is for vested remainders subject to divestment rather than contingent remainders or executory interests.
What interests does the following create:
O grants “to A for life, then if B graduates college, to B”
If A is alive and B is alive and still in HS:
A –> life estate
B –> contingent remainder
O –> reversion (if B never graduates, O and heirs take)
If B graduates college during A’s lifetime:
B’s contingent remainder AUTOMATICALLY transforms into an indefeasibly vested remainder
What interests does the following create:
O grants “to A for life, then if B has reached the age of 21, to B”
If A is alive and B is 19:
A –> life estate
B –> contingent remainder
O –> reversion
If B turns 21 during A’s life:
B’s contingent remainder AUTOMATICALLY turns into an indefeasibly vested remainder
What 4 issues arise w regards to remainders?
Contingent Remainders:
- Destructibility of Contingent Remainders
- Merger of Contingent Remainders
ALL Remainders:
- Rule in Shelley’s Case (Rule Against Remainders in Grantee’s Heirs)
- Doctrine of Worthier Title (Rule Against Remainders in Grantor’s Heirs)
What are the rules re: “Destructibility of Contingent Remainders”?
What is the modern rule?
Provide example to compare the two.
Common law rule (“Destructibility of Contingent Remainders”) –> if a contingent remainder failed to vest at the termination of previous estate, remainder is destroyed
Modern Rule –> destructibility rule is abolished. contingent remainderman’s interest will convert to a springing executory interest
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EXAMPLE
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O grants “To A for life, and if B has reached 21 to B”
A has died. B is 19.
Under destructibility rule –>
A has life estate
O has reversion
B’s contingent remainder is destroyed bc it failed to vest upon natural termination of previous estate
Under modern rule –>
A has life estate
O has reversion, subject to B’s springing executory interest
Once B turns 21, he takes
With regards to contingent remainders, what is the doctrine of merger?
When one person acquires all of the present and future interests in land, except for a contingent remainder - the remainder is destroyed
Example –> O conveys “to A for life, then to B’s children” Before B has children, O purchases the life estate. There is a merger bc children are unascertained, O has reversion + life estate.
NOTE –> the interests must NOT be acquired in the same instrument, as this would defeat grantor’s obvious intent
With regards to remainders, what is the Rule in Shelley’s Case (Rule against Remainders in Grantee’s Heirs)?
NOTE!! this rule has been abolished in most jdxns
At common law, if SAME instrument created a life estate in A, and gave remainder only to A’s heirs, the remainder was not recognized, and A took the life estate and the remainder
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EXAMPLE
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O conveys “to A for life, then to B for life, then to the heirs of A”
Under Shelley’s rule:
- remainder in heirs of A is transformed to a remainder in A
- This merged into a Fee Simple Absolute
NOTE: this is a rule of law, not construction. It applied regardless of intent.
Under Modern rule:
A has life estate
B has life estate
Unknown Heirs of A have a contingent remainder
O has a reversion (bc A may die without heirs)
With regards to remainders, what is the Doctrine of Worthier Title (Rule against Remainders in Grantor’s Heirs)?
Majority approach (DOWT) —> a remainder in GRANTOR’s HEIRS is INVALID and becomes a REVERSION in grantor
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Example
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O grants black acre “to A for life, then to the heirs of O”
Under DOWT (majority approach)–>
A has a life estate
O has a reversion
Minority approach –>
A has life estate
O’s unknown heirs have contingent remainder (bc they are unknown)
NOTE: this is a doctrine of construction, not law. If grantor INTENDED to create a contingent remainder in O’s heirs, it will stand despite DOWT
NOTE –> DOWT applies only to inter vivos transfers, not statements in wills, and only if the word “heirs” is used
With regards to “Vested Remainder Subject to Open?” - what are the rules as to when a class closes?
(two situations)
What happens if members of class with vested remainder subject to open PREDECEASE earlier holder of interest?
A class closes:
1. If there can be no more members of the group
EXAMPLE –> “To A, then to B’s children”
If A is alive, and B has two children C and D, class closes when B dies.
- “common law rule of convenience” –> when any member can take
EXAMPLE –> “To A, then to B’s Children”
Class ALSO closes when A dies, bc that’s when B’s existing children have the right to take. B’s unborn children will have NO right to take UNLESS they were in the womb.
(Unless there is express contrary intent)
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UNLESS survival is made an express condition, If children in above example predeceases, their descendants/devisees get the interest
