2. Future Interests

Question 1

What types of Remainders are there?

Answer 1

Contingent remainder
Vested remainder
Executory interest

Question 2

What is required for contingent remainder?

Answer 2

Created in unascertained/unknown taker

Subject to unmet condition precedent

Question 3

What is required for vested remainder?

Answer 3

Created in known taker

NOT subject to condition precedent

Question 4

What types of vested remainders are there?

Answer 4

Indefeasibly vested remainder
Vested remainder subject to condition subsequent
Vested remainder subject to open

Question 5

What is difference between condition precedent and subsequent?

Answer 5

CP - Before language creating remainder

CS - After language creating remainder

Question 6

What is required in vested remainder subject to open?

Answer 6

Open group

• Group of takers
• Additional takers may join class (unascertained)

Closed group

• Existing member demands possession
• Children in womb can demand possession (womb rule)

Question 7

What if group of takers die in vested remainder subject to open?

Answer 7

Group’s shares go to heirs/devisees

Question 8

What type of executory interests are there?

Answer 8

Shifting executory interest

• Cuts short Grantee’s interest
• Interest then goes to TP

Springing executory interest

• Cuts short Grantor’s interest
• Interest then goes to Grantee

Question 9

What is the difference between Remainder and Executory Interest?

Answer 9

Remainder

• Fee simple absolute
• Life estate

Executory interest
- Defeasible fees

Question 10

What is Rule against Perpetuities?

Answer 10

1) Determine future interest
- Contingent remainders
- Vested remainders subject to open (NOT condition subsequent) (e.g. ‘so long as’)
- Executory interests
- NOT leases!!!

2) Determine event required for future interest holder to take future interest
3) Determine measuring lives necessary for required events

4) Determine whether future interest holder can take within 21 years of measuring life’s death
- If certain within 21 years => Valid
- If NOT certain within 21 years => Void

Question 11

What are the recent reforms towards RAP?

Answer 11

‘Wait and see’ doctrine
- Suspect future interest’s validity determined at conclusion of measuring life

USRAP
- Future interest holder must take within 90 years of measuring life’s death

Cy Pres Doctrine

• Court may reform future estate to match Grantor’s intent and comply with RAP
• ONLY Trusts (NOT Wills)!!!

Question 12

Who may Vested Remainders be transferred (devisable/descendible) to?

Answer 12

Voluntary transfer

• Heirs
• Spouses

Involuntary transfer
- Creditors