Future Interests

Question 1

What are the three future interests that are capable of creation in the grantor?

Answer 1

1. The possibility of reverter;
2. The right of entry, also known as the power of termination;
3. The Reversion.

Question 2

What is a reversion?

Answer 2

A reversion is the future interest that arises in a 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 subsequent.
Occurs when A conveys less than he or she has.

Question 3

What are the three future interests in transferees?

Answer 3

1. Vested remainder;
2. contingent remainder;
3. executory interest.

Question 4

What are the three types of vested remainders?

Answer 4

1. The indefeasibly vested remainder;
2. The vested remainder subject to complete defeasance; and
3. The vested remainder subject to open.

Question 5

What are the two types of executory interests?

Answer 5

1. the shifting executory interest;

2. The springing executory interest.

Question 6

What is a remainder?

Answer 6

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 in which the remainder is created.

Question 7

What is a remainderman?

Answer 7

Sociable, patient and polite. He waits patiently for the preceding life estate or term of years to end then takes.
He always accompanies a preceding estate of fixed duration, and never follows a defeasible fee.

Question 8

When is a remainder vested?

Answer 8

If it is both created in an ascertained person and is not subject to any condition precedent.

Question 9

When is a remainder contingent?

Answer 9

When it is created in an unascertained person or is subject to a condition precedent or both. An unascertained person is one who is not yet born or not yet known. For example:

1. To A for life, then to B’s first child. A is alive and B has no children.
2. 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.

Question 10

What is a condition precendent?

Answer 10

A condition is a condition precedent when it appears before the language creating the remainder or is woven into the grant to the remainderman. For example:
1. To A for life, then, if B graduates from college, to B. A is alive. B is now in high school. Before B can take, he must graduate from college. Therefore, B has a contingent remainder and O has a reversion. However, if B graduates from college during A’s lifetime, B’s contingent remainder is transformed automatically into an indevisibly vested remainder.

Question 11

“To A for life, and, if B has reached the age of 21, to B” A is alive. B is 19 years old.
What interest does B have?
What interest does O have?
What interest does B have once he reaches 21 if A is still alive?

Answer 11

B has a contingent remainder.
O has a reversion because if B never reaches 21 and A dies, the estate reverts back to O or O’s heirs.
If B attains the age of 21 during A’s lifetime, B’s contingent remainder is transformed automatically into an indevisibly vested remainder.

Question 12

What is the Rule of Destructability of Contingent Remainders at both common law and today?

Answer 12

Common Law: A contingent remainder was destoryed if it was still contingent at the time the preceding estate ended.
Today: The destructability doctrine has been abolished. Thus, if the contingent remainder has not been fulfilled when the life estate dies, it goes to O or O’s heirs subject to B’s springing executory interest. Once B reaches 21, B takes.

Question 13

What is The Rule in Shelley’s Case both today and At common law?

Answer 13

Common Law: applies in one case only. “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 fee simple absolute.
Today: Has been virtually abolished. Thus, when O conveys to A for life, then to A’s heirs, A has a life estate, A’s unknown heirs have a contingent remainder and O has a reversion because A could die without heirs.

Question 14

What is the doctrine of worthier title (or the rule against a remainder in grantor’s heirs)?

Answer 14

Still viable in most states.
It applies when O, who is still alive, tries to create a future interest in his own heirs. For example, O, who is alive, conveys “To A for life, then to O’s heirs.”
If the doctrine did not apply, A has a life estate and O’s heirs have a contingent remainder because O is alive and has no heirs.
However, because of the doctrine of worthier title, the contingent remainder in O’s heirs is void. Thus, A has a life estate and O has a reversion.

Question 15

Why is the Doctrine of Worthier Title still around today and the Rule in Shelley’s cause abolished?

Answer 15

The Doctrine of Worthier Title is a rule of construction, and not a rule of law. Therefore, the grantor’s intent will control. If the grantor clearly intends to create a contingent remainder in his heirs, that intent is binding.
However, the Rule in Shelley’s case is a rule of law rather than of construction. Therefore, the grantors intent is irrelevant. The grantor cannot override the rule, even with clear intent.

Question 16

What are the three types of vested remainders?

Answer 16

1. The indefeasibly vested remainder;
2. The vested remainder subject to complete divestment;
3. The vested remainder subject to open.

Question 17

What is the indefeasibly vested remainder?

Answer 17

The holder of this remainder is certain to acquire an estate in the future, with no strings attached.

Question 18

What is the following interest of A and B?

“To A for life, remainder to B.” A is alive, B is alive.

Answer 18

A - Life estate;

B - Indefeasibly vested remainder.

Question 19

What is the vested remainder subject to complete defeasance (also known as the vested remainder subject to total divestment)?

Answer 19

Here the vested remainderman exists. His taking is not subject to any condition precedent. However, his right to possession could be cut short because of a condition subsequent.

Question 20

How to distinguish between a condition precedent and a condition subsequent?

Answer 20

Condition precedent - creates a contingent remainder.
Condition subsequent - creates a vested remainder subject to complete defeasance.
To tell the difference, apply 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, and you have a vested remainder subject to complete defeasance.

Question 21

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 years old.

1. What does A have?
2. What does B have?
3. What does C have?
4. If B is under 25 at A’s death, what does B have?
5. What if B dies before 25?
6. What does O have?

Answer 21

1. Life estate;
2. Vested remainder subject to complete divestment;
3. Shifting executory interest;
4. B takes because A’s death is not a prerequisite, rather, it turns on his own age.
5. B and B’s heirs lose everything and his interest goes to C and C’s heirs.
6. A reversion becuase it is possible that neither C nor C’s heirs will exist if and when the condition is breached.

Question 22

O conveys “To A for life, and if B has reached teh age of 25 to B.” A is alive. B is 20 years old.

1. What does A have?
2. What does B have?
3. What does O have?
4. If B is still alive but under 25 at A’s death, what does B have?

Answer 22

1. Life estate;
2. contingent remainder because his taking is subejct to a condition precendent.
3. Reversion because if B does not reach 25, it reverts back to him and his heirs.
4. B cannot take. Rather, the estate reverts back to O or O’s heirs, who holds it subject to B’s springing executory interest. And if B reaches 25, it goes to B.

Question 23

What is the remainder subject to open?

Answer 23

A remainder is vested in a group of takers, at least one of whom is qualified to take. But each class members share is subject to partial diminution because additional members can still join in.

Question 24

When is a class open and when is a class closed?

Answer 24

In a remainder subject to open, a remainder is:

1. Open - if others can join in the class;
2. Closed - If no others can join.

Question 25

When will a class close?

Answer 25

Apply the common law rule of convenience. The class closes whenever any member can demand possession.

Question 26

When will the class close in the following hypo?
O conveys "To A for life, then to B's children." A is alive. B has two children, C and D.

Answer 26

At B’s death the class will close, also according to the rule of convenience, at A’s death, no matter that B is still alive. Because that’s when C and D can demand possession.

Question 27

What is the womb rule exception to the closing of classes?

Answer 27

A child in the womb at the time of A’s (the life estate) death will share with the class.

Question 28

What is an executory interest?

Answer 28

It is a future interest created in a tranferee (a third party), 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 29

What is a shifting executory interest?

Answer 29

It always follows a devisable fee and cuts short someone other than O, the grantor.

Question 30

O conveys “To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs.”

1. What does B have?
2. Why doesn’t be have a remainder?
3. What does A have?

Answer 30

1. A shifting executory interest.
2. Because remainder never follow devisable fees.
3. A has a fee simply subject to B’s shifting executory interest.

Question 31

What is a springing executory interest?

Answer 31

It always follows a devisable fee and cuts short O, the grantor.