M4: Future Interests Flashcards
What is a future interest?
Confers rights to the enjoyment of property at a future time
Almost every trust today involves one or more future interests
At the foundation blocks of wills and estate planning
True or false: All three future interests retained by transferor are exempt from the rule against perpetuities
True!
True or false: Once a reversion always a reversion
True!
True or false: All reversions are certain
False: Reversions are not always certain
Certain (Term of Years + Reversion): Ex: “To A for five years”
O’s Deed → A’s 5 years → O’s reversion (in FS)
Not Certain: “To A for Life, then to B if B grows to be 6 ft tall, if not to C if she becomes a botanist, then to D if D graduates from DU law”
O’s Deed—> A’s life estate —> and if B, C, D don’t meet the conditions? → O’s reversion (in FS)
H: O grants his fee simple absolute “To A for life, then to B and his heirs” –> is there a reversion?
No, B gets the remainder in fee simple absolute after A’s life ends
H: O grants his fee simple absolute “To A for life, then to B and the heirs of her body” –> is there a reversion?
No, A has a life estate. B has a remainder in fee simple absolute. “heirs of her body” –> fee tail not recognized
H: O grants his fee simple absolute “To A for life, then to B and his heirs if B attains the age of 21 before A dies” is there a reversion?
A has a life estate, B has a remainder in fee simple absolute. Reversion is not certain.
If A lives another 6 years, no reversion
If A does not live another 6 years, reversion back to O
H: O grants his fee simple absolute “To A for 20 years” - is there a reversion?
Reversion is certain back to O, there’s a term of years on the estate to A
H: O grants his fee simple absolute “To A for life, then to B for life” then O dies with a will devising all of O’s property to C. Then A dies, then B dies.
Who owns the estate?
A has a life estate
B has a successive life estate
Once A and B are dead, it reverts back to O/C in fee simple absolute
How do we know if a remainder is vested?
Both must be true!
1) Given to an ascertained person AND
2) Not subject to a condition precedent
If it is created in an ascertained person AND ready to become possessory whenever and however all preceding estates expire
How do we know if a remainder is contingent?
1/2 must be true (or both):
1) Given to an unascertained person OR
2) Made contingent upon some event occurring other than the natural termination of the precedeeding estate (subject to a condition precedent)
Either way, it’s not ready now to become possessory upon the expiration of preceding estate
What are the 3 types of Vested Remainders?
1) Indefeasibly Vested
2) Vested Remainder Subject to Divestment (VRSD)
3) Vested Remainder Subject to Open (VRSO)
Classify this type of remainder: “To A for life, then to B and her heirs”
What if B dies? Does that change B’s future interest?
+ B has an indefeasibly vested remainder certain to become possessory upon termination of A’s life estate (in FSA)
+ If B dies during A’s life, on B’s death, B’s remainder passes to B’s devisees (if B has a will) or to B’s heirs (if intestate) or to the state (eschat)
+ B (or B’s successors in) interest is certain to take possession upon A’s death, B cannot lose the property.
Note: No reversion of any kind: once you add A’s life estate to B’s FSA = nothing left
Classify this type of remainder: “To A for life, then to B and B’s heirs, but if B does not survive A, to C and his heirs.”
+ B does not have a contingent remainder, but a VRSD
+ C has a shifting EI
Why isn’t B’s interest a CR?
+ B is not subject to condition precedent, which makes it a vested remainder, not CR
+ C takes on the condition “but if B does not survive A” in his Executory Interest which can become possessory only by divesting B’s remainder –> “Is it time yet?”
Classify this type of remainder: “To A for life, then to B if B graduates from DU”
A = life estate B = contingent remainder in graduating from DU
Why is B’s interest a CR and not VR?
+ B is subject to a condition precedent, which then makes it a CR
Classify this type of remainder: “To A for life, then to B and her heirs if B survives A, and if B does not survive A to C and his heirs”
A = life estate
B = CR
C= CR
–> Alternate Contingent Remainders:
1) “If B survives A” subjects B’s remainder to the condition precedent of B surviving A
OR
2) “And if B does not survive A” subjects C’s remainder to the opposite condition precedent
When writing/examining a written conveyance, is a Contingent Remainder inside or outside the box?
Inside the Box: If the conditional element is incorporated into the description of, or into the gift to the remaindermen, the the remainder is contingent
When writing/examining a written conveyance, is a Vested Remainder inside or outside the box?
Out of the Box: If, after words giving a vested interest, a clause is added divesting it, the remainder is vested
True or false: If the first future interest created is a contingent remainder in FS, the second future interest in a transferee will also be a contingent remainder
True: FS –> CR(1) –> CR(2)
True or false: If the first future interest created is a vested remainder in FS, the second future interest in a transferee will be a VRSO
False: FS –> VR –> EI
If the first future interest created is a vested remainder in FS, the second future interest in a transferee will be a divesting executory interest
Why does the difference between CR and VR matter?
1) Acceleration
Vested Remainders = accelerate possession whenever the preceding estate ends
Contingent Remainders = cannot become possessory so long as it is contingent
2) RAP (most important difference)
Contingent remainders are subject to RAP
Vested remainders are not subject to RAP
Classify this remainder: “To A for life, then to A’s children and their heirs”
+ A has one child, Bob
+ A is still alive
Vested Remainder Subject to Open
Why?
+ We have one ascertained person
+ No condition precedent
+ The group of people “A’s children” isn’t fully determined yet = A could still have more kids
Classify this remainder: “To A for life, then to A’s children”
+ A has no children
+ A is still alive
Contingent Remainder in Fee Simple
Why?
+ A doesn’t have any children… yet
+ No ascertained people
+ A’s Children have a CR in Fee Simple
What is the rule of destructibility and is it still used today in modern law?
Removing/Destructing CR’s if they did not vest in time, reverting back to O
Ex: To A for life, then to B if he has reached 18
destructibility: If A dies when B is 17, the property would revert back to O.
Abolished.
Instead, today this is rarely seen but instead of destruction, O would have FSSEI until B turned 18, B has a executory interest in fee simple
What is the rule of Shelley’s Law and is it still used today in modern law?
A would get the property in FSA and heirs would get nothing, according to Shelley’s Law. If unknown/ascertained remainders, they get nothing. Abolished.
Ex: To A for life, then to A’s heirs
Today, A would have a life estate, A’s heirs would have a contingent remainder
What is the Doctrine of Worthier Title and is it still used today in modern law?
To A for life, then to O’s heirs
Worthier title: After A’s life estate ends, the property reverts back to O –> abolished
Modern law: A’s life estate is followed by contingent remainder
What pairs with an Executory Interest?
Fee Simple Subject to Executory Interest
H: O conveys Greenacre to “A and her heirs.” A’s only child, B, runs up large unpaid bills. B’s creditors can attach all B’s property to satisfy their claims. Does B have an interest in Greenacre that his creditors can reach?
No, the words “and her heirs” in the transfer to A are “words of limitation” and create no interest in anyone but A.
H: O, owner of Blackacre, has two children, A (daughter) and B (son) and no surviving spouse. B dies testate (with a will), devising all his property to W (his wife). B is survived by three children, B1 (daughter), B2 (son) and B3 (daughter). A has one child, A1 (son). O then dies intestate. If O died in Colorado in 2003, who owns Blackacre?
“I’m not dead yet”
One-half to A and one-sixth each to B1, B2 and B3
This is how distribution by representation or “per stirpes” (meaning by the roots) works.
+ The two lineal descendants of O, A and B, would have each gotten 1/2 as the two children of O.
+ So, A gets 1/2 and B gets 1/2.
+ However, because B predeceased O, B’s children step into his place and share equally in B’s 1/2 shares by representation.
+ Each child of B gets 1/6 each.
+ W has no interest despite B’s will because at the time B died, he had no interest yet in Blackacre to leave by will, either to W or anyone else! Blackacre came to B only later, when O died, and passed directly to B’s children by representation.
H: O, owner of Blackacre, has two children, A (daughter) and B (son) and no surviving spouse. B dies testate (with a will), devising all his property to W (his wife). B is survived by three children, B1 (daughter), B2 (son) and B3 (daughter). A has one child, A1 (son). O dies O dies intestate. If O died in England in 1800, who owns Blackacre?
B2, the only son of the only son.
In 1800 and in England, primogeniture still governed and it requires property to pass only to first born sons.
H: O conveys Blackacre to “A and his heirs in fee simple absolute.” A dies without a will and without heirs. O survives. Who owns Blackacre?
The State by escheat, O gave away his whole estate to A by giving A a fee simple absolute. When A dies without any heirs, the state takes by escheat.
H: O conveys Blackacre to “A for life, then to B and her heirs in fee simple absolute.” B dies without a will and without heirs of any kind. A dies survived by a spouse, H. O survives. Who owns Blackacre?
The State by escheat
O gave B the entire fee simple absolute. There was nothing left for O when B died without a will/heirs.
A doesn’t get it because A had a life estate, enjoyed it during their life.
