Future Interests Flashcards
Condition subsequent
does not postpone vesting. Allows vesting. If condition occurs, then the interest that is vested is divested. If condition not met, gift will be taken away. Often described as a defeasible condition.
Condition precedent
must be met before there is a vesting. Postpones vesting.
Brown v Moody (1936, ACPC?)
If no condition precedent, there is immediate vesting in the remainderman on testator’s death (i.e. when grant takes place) so a preceding life interest never stops the vesting of an interest in the remainderman. Further, the mere postponement of the distribution of the capital, through the waiting for the life estate to terminate, will not by itself exclude immediate vesting of an interest.
Ratio: Illustration of condition subsequent (which can only occur after vesting and if it does it divests, but can’t prevent vesting in the first place like a condition precedent)
*When you see clause re:issue it will generally lead to a condition subsequent because it is telling you that the testatrix is concerned to have a substitution in the event of your death. → here leaving issue was a key factor to finding condition subsequent.
Re Squire (1962 SCC?)
Neither condition subsequent nor precedent. Interest is vested absolutely and the rule in Saunders applies so the grandsons were entitled to receive the property at age 21
If a testator gives absolute gift giving both capital and accumulated interest, but attempts to accumulate interest for a number of years, then he is deemed to have meant an immediate gift. If the gift is contingent (i.e. condition precedent) or defeasible (i.e. condition subsequent) or if any other person may have an interest in the trust, then this principle does not apply.
Will interpreted as a whole:
1) “When and so soon as” or “upon attaining” are not conditions precedent, whereas “if you should attain” is a condition precedent.
2) The property was separate from the estate (if it had been a condition precedent more likely property would have been kept with the estate)
3) The income was to accumulate for one beneficiary (Teddy)
4) Most importantly there was NO GIFT OVER specified if teddy did not reach 30 i.e. didn’t say “to Teddy, but if he dies before 30 then to B” (contrast this with Phipps v. Ackers). → key in this case.
Re Carlson (1975, BSCS)
Ratio: Illustration of a condition precedent (i.e. condition which must be met before vesting can occur)
When the whole of a gift, income and capital may be used for the benefit of one person until a stated age, and “then the residue” is to be divided between him and another, the residue is not vested in the other until the first person reaches the stated age. This is because when the first person has the power to encroach, the interest in the residue cannot vest as the exact amounts (or even if anything will be left) cannot be determined
Cannot say that certain words always create a condition precedent and other always create a condition subsequent, since must look at the provisions of a will in context. However, without further context words like “upon”, “when”, “if”, “as”, “as soon as”, “provided” all are more likely to imply conditions precedent, whereas “but if” is more likely to imply condition subsequent.
Phipps v Ackers (1842, HL)
Essentially puts in a condition subsequent where there is a gift over at a certain age and if they don’t meet that age then goes to another. So interest in 1st is vested but subject to divest.
If you Specify gift over then you come under rule in phipps and ackers …. and cant use saunders rule.
when a gift is to a devisee upon attaining a certain age, with a gift over to some other ascertained person(s) if the devisee dies before reaching that stated age, the very existence of the gift over shows that the first devisee is to take an immediate interest (albeit subject to divesting if don’t reach)
When you see a clause that says what happens if grantee dies before attaining contingency and mentions issue, then Phipps v. Ackers is likely to apply
Re Barton Estate (1941, SCC)
Phipps v. Ackers rule applies to personalty as well as realty
Approved the rule in Phipps v. Ackers: “if there is a gift over upon death under the stated age, the gift over shows that the first devisee is to take whatever interest the person claiming under the devise over is not entitled to i.e. the immediate interest.”
Festing v Allen (1843, Exch.)
limit to the application of the Phipps v. Ackers rule (i.e. condition precedent rather than condition subsequent found on age attainment requirement in contingent remainder) in particular to situations where the first donee is ascertained and in existence at the time of the death of the testator.
Court says phipps not to cover situations that are not precisely the same as phipps v ackers. Doesn’t necessarily have to refer to with or without issue, but has to apply to persons who are ascertained and no further .
