Future interests

Question 1

6 categories of future interests, based on whether they are retained by grantor or a transferee

Answer 1

retained by grantor: 1) possibility of reverter (POR), 2) right of entry (or power of termination), 3) reversion
held by a transferee: 1) vested remainder, 2) contingent remainder, 3) executory interest (either shifting or springing)

Question 2

future interest capable of creation in grantor (3)

Answer 2

possibility of reverter (POR)
right of entry (power of termination) (ROE)
reversion

Question 3

future interest capable of creation in grantor

possibility of reverter (POR)

Answer 3

Accompanies ONLY fee simple determinable (FSD)

FSD/POR

Question 4

future interest capable of creation in grantor

right of entry (power of termination) (ROE)

Answer 4

Accompanies ONLY FS SCS

Bobby Brown/Brittany Spears - It’s My Perogative

Question 5

future interest capable of creation in grantor

reversion

Answer 5

Reversion is the future interest that arises in a grantor who transfers an estate less all she started with, other than FSD or FS SCS.

Question 6

future interest in transferee

Answer 6

If future interest is held by someone other than the grantor, it has to be either: 1) vested remainder (3 species), 2) contingent remainder, or 3) executory interest (2 species)

Question 7

future interest in transferee

vested remainder - 3 species

Answer 7

1. indefeasibly vested remainder
2. vested remainder subject to complete defeasance (aka vested remainder subject to total divestment)
3. vested remainder subject to open

Question 8

future interest in transferee

executory interest - 2 species

Answer 8

1. shifting executory interest

2. springing executory interest

Question 9

future interest in transferee

3 tasks in assessing future interests in transferees

Answer 9

1. distinguish vested remainders (3 kinds) from contingent remainders
2. distinguish 3 kinds of vested remainders from each other
3. distinguish all remainders from executory interests

Question 10

future interest in transferee
3 tasks in assessing future interests in transferees
remainder definition and 3 actions of remainderman

Answer 10

remainder - a future interest in a grantee that is capable of becoming a possessory upon the expiration of a prior possessory estate created in the same conveyance in which the remainder is created.
Remainderman always accompanies a preceding estate of fixed duration (usually life estate or term of years)
Remainderman never follows a defeasible fee.
Remainderman cannot cut short or divest a prior transferee.
(If the present estate is a defeasible fee, and if the future interest is held by someone other than the grantor, the future interest has to be an executory interest, not a remainder.)

Question 11

future interest in transferee
3 tasks in assessing future interests in transferees
distinguish vested remainders from contingent remainders

Answer 11

Remainder is vested if it is BOTH 1) created in an ascertained person AND 2) is not subject to any condition precedent.
Remainder is contingent if it is created in an unascertained person OR is subject to a condition precedent

Question 12

future interest in transferee
3 tasks in assessing future interests in transferees
distinguish vested remainders from contingent remainders
features of contingent remainders - unborn or unascertained persons

Answer 12

The remainder can be contingent because is it is created in as yet unborn or unascertained persons.
Examples:
If To A for life, then to B’s first child. A is alive and B has no children yet.
If To A for life, then to B’s heirs. A is alive and B is alive BUT a living person has no heirs. (While alive, his heirs are unknown.)
If To A for life, then to those children of B who survive A. A is alive (We don’t know which of B’s children will survive A)

Question 13

future interest in transferee
3 tasks in assessing future interests in transferees
distinguish vested remainders from contingent remainders
features of contingent remainders - subject condition precedent

Answer 13

The remainder can be contingent because it is subject to a 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.

Question 14

future interest in transferee

contingent remainder rules (3)

Answer 14

Rule of Destructibility of Contingent Remainders
Rule in Shelley’s case
Doctrine of Worthier Title

Question 15

future interest in transferee
contingent remainder rules
Rule of Destructibility of Contingent Remainders

Answer 15

At common law, a contingent remainder was destroyed if it was still contingent at the time the preceding estate ended.
(i.e., To A for life, and if B has reached 21 yo, to B. B is only 19)
Historically at common law, B’s contingent remainder was destroyed, and O or O’s heirs would take FSA.
Today, the destructibility rule is abolished. If still contingent at the time the preceding estate ends, O or O’s heirs will hold the estate subject to B’s springing executory interest. Once B reaches 21, B takes.

Question 16

future interest in transferee
contingent remainder rules
Rule in Shelley’s case

Answer 16

At common law, the rule only applies in 1 setting:
To A for life, then on A’s death, to A’s heirs.
Historically, the present and future interests merge, giving A FSA. (promotes alienability)
Today, Rule in Shelley’s Case is abolished.
A would have a life estate. A’s yet unknown heirs have a contingent remainder. O has reversion since A could die without heirs.

Question 17

future interest in transferee
contingent remainder rules
doctrine of worthier title

Answer 17

DOWT - rule against a remainder in O’s heirs
This doctrine is still viable in most states today. Applies when O who is alive tries to create a future interest in his heirs.
To A for life, then to O’s heirs
If DOWT did not apply, A has life estate and O’s heirs have contingent remainder (O is still alive and A Living Person has no heirs)
Under DOWT, the contingent remainder in O’s heirs is void. A has a life estate and O has reversion.

Question 18

future interest in transferee
contingent remainder rules
distinguish 3 kinds of vested remainders
indefeasibly vested remainder

Answer 18

indefeasibly vested remainder. Holder of this remainder is certain to acquire an estate in the future with NO STRINGS ATTACHED. If B dies before A, B’s future interest passes by will or intestacy (devisable or descendible)

Question 19

future interest in transferee
contingent remainder rules
distinguish 3 kinds of vested remainders
vested remainder subject to complete defeasance
(aka vested remainder subject to total diverstment)

Answer 19

vested remainder subject to complete defeasance (forfeiture). Remainderman exists and his taking is NOT subject to any condition precedent. However, his right to possession could be cut off because of condition subsequent.
Apply the Comma rule to distinguish between contingent remainder and vested remainder subject to complete defeasance

Question 20

future interest in transferee
contingent remainder rules
distinguish 3 kinds of vested remainders
comma rule

Answer 20

Comma rule: When conditional language in a transfer follows language that, taken along and set off by commas, would create a vested remainder, the condition is a condition subsequent, and you have 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 you have a contingent remainder.

Question 21

future interest in transferee
contingent remainder rules
distinguish 3 kinds of vested remainders
vested remainder subject to open

Answer 21

Remainder is vested in a group of takers, at least 1 of whom is qualified to take. But each class member’s share is subject to partial diminuition b/c additional members can still join in.

Question 22

future interest in transferee
contingent remainder rules
distinguish 3 kinds of vested remainders
vested remainder subject to open
class is either open or closed

Answer 22

Class is open: others can join
Class is closed: others cannot join
The class closes whenever any member CAN DEMAND POSSESSION.

Question 23

future interest in transferee
contingent remainder rules
distinguish all remainders from executory interests

Answer 23

Executory interest: a future interest created in a transferee (3rd pty) which is NOT a remainder and which takes effect by either CUTTING SHORT some interest in another person (shifting) OR in the grantor or his heirs (springing)

Question 24

future interest in transferee
contingent remainder rules
distinguish all remainders from executory interests
shifting executory interest

Answer 24

shifting executory interest - always follows a defeasible fee and cuts short someone other than O (grantor)

Question 25

future interest in transferee
contingent remainder rules
distinguish all remainders from executory interests
springing executory interest

Answer 25

springing executory interest - always follows a defeasiable fee and cuts short the grantor