Property 2. Future Interests

Executory interest. Example.

"To A and her heirs, but if B returns from Canada sometime next year, to B and his heirs." It does not matter that B is in control. Not a remainder

Bright Line Rule #2 Example.

"To A and his heirs so long as the land is used for farm purposes, and if the land ceases to be so used, to B and his heirs."

Remainder contingent due to un-ascertained persons. Example.

"To A for life, then to B's first child." A is alive, B has no children. "To A for life, then to B's heirs." A is alive. B is alive. "To A for life, then to those children of B who survive A." A is alive. We don't yet know which, if any, of B's children will survive A.

Remainder contingent because it is subject to a condition precedent. Example.

"To A for life, then, if B graduates from college, to B." A is alive. B is now in high school. B has not satisfied the condition precedent.

What are the three future interests that can be held by someone other than the grantor?

1. A vested remainder 2. Contingent remainder 3. Executory interest

What is the Four-Step Test for Assessing potential Rap problems?

1. Determine which future interests have been created by the conveyance. 2. Identify the conditions precedent to the vesting of the suspect future interest. 3. Find a measuring life. Look for a person alive at the date of the conveyance and ask whether that person's life or death is relevant to the condition's occurrence. 4. Ask: Will we know, with certainty, within 21 years of the death of our measuring life, if our future interest holder can or cannot take?

What is the womb rule?

A child of B in the womb at A's death will share.

What is an executory interest?

A future interest created in a transferee (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).

What is the charity-to-charity exception?

A gift from one charity to another will not violate the rap.

Rap Bright Line Rule #1

A gift to an open class that is conditioned on the members surviving to an age beyond 21 violates the common law Rap. Bad as to one, bad as to all. The entire class gift is void.

When is a remainder contingent?

A remainder is contingent if it is created in an un-ascertained person; or is subject to a condition precedent, or both.

When is a remainder a vested remainder?

A remainder is vested if it is created in an ascertained and is not subject to a condition precedent.

What would happen without the Doctrine of Worthier title?

A would have a life estate and O's heirs would have contingent remainders. However, the Doctrine of Worthier title voids the contingent remainder in O's heirs and gives O a reversion.

Rap Bright Line Rule #2

An executory interest with no limit on the time within which it must vest violates the Rap.

The Rule of Destructibility of Contingent Remainders

At common law, a contingent remainder was destroyed if it was still contingent at the time the preceding estate ended.

Example. "To A for life, and if B has reached the age of 21, to B." Now, A has died, leaving behind B, who is still only 19 years old.

At common law: B's contingent remainder would be destroyed. O or O's heirs would take in Fee Simple Absolute. Today: Destruct-ability Rule has been abolished. Thus, if B is still under 21 when A dies, O holds the estate subject to B's springing executory interest.

What happens if A dies before B has reached 25 years old in the above example?

B cannot take. Instead, the estate reverts back to O or O's heirs who hold subject to B's springing executory interest.

What does B have in the above example?

B has a contingent remainder.

What does C have in the above example?

C has a shifting executory interest.

Rule Against Perpetuities.

Certain kinds of future interests are void if there is any possibility, however remote, that the given interest may vest more than 21 years after the death of a measuring life.

How is grantor's intent treated in the Doctrine of Worthier Title?

Grantor's intent controls. If grantor clearly intends to create a contingent remainder in his heirs, that intent is honored.

Why is a remainder polite?

He always accompanies a preceding estate of fixed duration. Thus, he waits patiently.

Vested remainder subject to open.

Here, a remainder is vested in a group of takers, at least one of whom is qualified to take. Example: "To A for life, then to B's children." A is alive. B has two children, C and D. C and D have vested remainders subject to open.

What is an example of a contingent remainder?

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

Rule in Shelley's Case. Common law rule.

O conveys "To A for life, then, on A's death, to A's heirs." A is alive. These would merge to create a Fee Simple Absolute. This would apply even in the face of contrary grantor intent.

What does O have in the above example?

O has a reversion, because it is possible that neither C nor C's heirs will exist if and when the condition is breached.

What does O have in the above example?

O has a reversion.

In the above example, what happens once A dies?

Once A dies, a child of B born or conceived thereafter will not take.

What if the clause is written, "To A and his heirs, but if the land ceases to be used for farm purposes, to B and his heirs."

Same result but now once the offensive future interest is stricken the conveyance is no longer grammatically sound. Thus the entire conditional clause is stricken. A now has a Fee Simple Absolute. O has nothing

What is the Doctrine of Worthier title?

Still viable in most states. It applies when O, who is alive, tries to create a future interest in his heirs. Example. O, who is still alive, conveys "To A for life, then to O's heirs."

What is the modern treatment of the rule in Shelley's Case?

The Rule in Shelley's case has been abolished. Now A's heirs have a contingent remainder and O has a reversion.

Indefeasibly vested remainder

The holder of this remainder is certain to acquire an estate in the future with no strings attached. Example. "To A for life, remainder to B." A is alive. B is alive.

Vested remainder subject to complete defeasance

The remainder man's right to possession could be cut short because of a condition subsequent. Example: 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.

What is C or D predeceases A?

Their share does to their devisees or heirs.

What happens once the offensive future interest is stricken?

We are left with: "To A and his heirs so long as the land is used for farm purposes." O has a possibility of reverter. The rap does not apply to future interests in the grantor.

What is the problem with the above example?

We will not know within 21 years of the death of the measuring life, if a future interest holder can take. A might abide by the condition during her lifetime and the condition may not be breached for hundreds of years.

What does A have in the above example?

A has a Fee Simple Subject to B's Shifting Executory Interest.