Future Interests Flashcards
What are the three types of future interests capable of creation in the grantor?
- Possibility of reverter (only FS)
- Right of Entry aka Power of termination (only FS subject to a condition subsequent)
- The reversion (everything else)
What are the three types of future interests in transferees?
- A vested remainder OR 2. A contingent remainder OR 3. An executory interest
What are the three things you need to distinguish when assessing future interests in transferees?
You must distinguish:
- Vested remainders (three types) from Contingent remainders;
- The three types of vested remainders from each other; AND
- All remainders from Executory interests
What is a remainder?
A remainder is 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)
What is a VESTED remainder?
A remainder is vested IF:
- It is created in an ASCERTAINED person, AND
- It is NOT subject to any condition precedent
What is a CONTINGENT remainder?
A remainder is contingent IF:
- It is created in an UNascertained person, OR
- It IS subject to a condition precedent
(or both)
(i.e., If it’s not a vested remained, it MUST be contingent!)
What does it mean to be an ascertained vs. an unascertained person?
(Examples)
Ascertained: the remainder exists in a specific, living person
e.g., “To A for life, then to B’s son,” where A and B’s son are both alive.
Unascertained: the remainder exists in an uncertain or yet unborn person
e. g., “To A for life, then to B’s first child,” where A is alive but B has no kids yet
e. g., “To A for life, then to B’s heirs,” where A is alive and B is alive, so unascertained because a living person can have no heirs
What is a condition precedent?
A condition precendent is a condition that appears BEFORE the language creating the remainder, or is woven into the grant to the remainderman
e.g., “To A for life, then, IF B GRADUATES COLLEGE, to B”
What are the types of vested remainders?
- indefeasibly vested
- vested remainder subject to complete defeasance (total divestment)
- vested remainder subject to open (only remainders can be vested)
What are the two types of executory interests?
- shifting
- springing
What is an executory interest?
A future interest created in a 3d party, which is not a remainder and which takes effect either by:
- cutting short some interest of another OR
- cutting short some interest in the grantor or his heirs
What is a shifting executory interest?
(“Fee simple with a catch”)
- Follows defeasible fee AND
- Cuts short someone other than O, the grantor
e. g., “O to A and his heirs, but if B returns from Canada, to B and her heirs.”
B has a shifting executory interest; A has fee simple subject to B’s shifting executory interest
(B’s interest is not a remainder because remainders NEVER follow defeasible fees!)
What is a springing executory interest?
Cuts short O, the grantor
e.g., “O to A, if and when A marries.” A is unmarried.
A has a springing executory interest
O has fee simple subject to A’s springing executory interest
NY QUESTION
What are executory interests and contingent remainders called in NY?
(Distinction abolished)
Remainders subject to a condition precedent
What is a remainder (of any type, vested or contingent) (4 elements)
A remainder is (1) a future interest created in a grantee [that is] (2) capable of becoming possessory (3) upon the expiration of a prior estate [that is] (4) created in the same conveyance as the remainder
What are the characteristics of remainders? (2)
- Always accompany a preceding estate of known, fixed duration (LE or Term of Years)
- Cannot cut short or divest a prior transferee (never follows a defeasible fee—that would be an executory interest)
What makes a remainder vested?
Created in a known, ascertained person AND
Not subject to any condition precedent
What makes a remainder contingent?
Created in an unborn or unascertained person AND/OR
Is subject to a condition precedent
NY QUESTION
What are future interests subject to a condition precedent called in NY?
Remainder subject to a condition precedent (usually a contingent remainder)
What constitutes a condition precedent?
- It appears before the language creating the remainder OR
- Is woven into the grant to the remainderman (a prerequisite)
What are the limiting doctrines to contingent remainders? (3)
- Destructibility of contingent remainder
- Rule in Shelley’s Case
- Doctrine of worthier title
What is the rule of destructibility of contingent remainders?
(Historical common law rule)
(Present MBE)
(NY law)
Historically: IF contingent remainder still contingent when preceding estate destroyed, contingent remainder destroyed
Today (MBE and NY): Rule abolished
What is the rule in Shelley’s Case?
i.e., “To A for life, then, on A’s death, to A’s heirs,” where A is alive
(Historical)
(Present MBE)
(NY)
Historically: RISC present and future interests merge, giving A a FSA
Today: (virtually abolished) RISC creates Life Estate in A, contingent remainder in heirs; O has reversion
NY: RISC abolished
What is the rule w/r/t the doctrine of worthier title?
i.e., O (who is alive) to A for life, then to O’s heirs. What are the future interests of O, A, and O’s heirs?
(MBE)
(NY)
MBE: A contingent remainder created in living O’s heirs is void. So A has a life estate and O has reversion.
((NOTE: Rule of construction, not law! Grantor intent can overcome if he clearly intends to create the contingent interest in his heirs))
NY: Abolished as to transfers taking effect after September 1967. So A has a life estate and O’s heirs have a contingent remainder.
What is an indefeasibly vested remainder?
A holder that is certain to acquire the estate in the future with no strings attached
What happens to indefeasibly vested remainders upon the holder’s death?
Passes per will or intestacy
What is a remainder vested subject to complete defeasance?
(Defeasance = forfeiture)
A known holder with no condition precedent
Estate has a condition subsequent
NY QUESTION
In NY, what is a vested remainder subject to complete defeasance called?
Remainder vested subject to complete defeasance
What is the doctrine of worthier title?
Doctrine of worthier title happens when living grantor tries to create a future interest in his own heirs.
What is the rule for distinguishing between a condition subsequent and a condition precedent?
The 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.
e.g., “To A for life, remainder to B, PROVIDED, HOWEVER, THAT IF B DIES UNDER AGE-25, to C.”
A has a life estate; B has a VESTED remainder subject to complete defeasance.
BUT IF conditional language appears BEFORE commas, condition precedent.
e.g., “To A for life, AND IF B HAS REACHED AGE-25, to B.”
A has a life estate; B has a CONTINGENT remainder.
What is a vested remainder subject to open?
A remainder vested in a group of takers, at least one of whom is qualified to take. Each class member’s share is subject to partial diminution because additional takers can still join.
When is a remainder class open?
Others can still join the class
When is a remainder class closed?
No others can join the class
What is the common law rule of convenience for determining when a remainder class closes?
The class closes whenever any member can demand possession.
(BUT see “womb rule” exception)
What is the “womb rule exception” to the common law rule of convenience?
A child in the womb will share with the already-born remaindermen when a class closes
What happens when the holder of a vested remainder subject to open dies?
(Common law rule)
(NY rule)
Common law: The remainderman’s share goes to heirs or devisees
NY: see wills
