Future Interests

B conveyed Blackacre “to C for life, then to C's daughter D if she reaches 21.” C is alive and D is 15. Which of the following is true in most modern jurisdictions?

• D has a vested remainder, subject to divestment.

• D has a contingent remainder.

• D has an executory interest.

• D has a vested remainder.

Answer explanation

The correct answer is B. The interest is a remainder because it follows the natural termination of the preceding life estate. It is contingent because it is subject to a condition precedent; D takes only if she reaches 21. When she reaches 21, the interest will vest, but she is only 15. Therefore, answers A and D are incorrect. An executory interest cuts short or divests the previous estate upon the happening of some event. That will not happen here. The life estate will end only at C's death, and C is incorrect.

B conveyed Blackacre “to C for life, then to C's daughter D if she reaches 21.” C died when D was 15 years old. What is the state of the title, at common law?

• At common law, D would have Blackacre in fee simple absolute.

• At common law, C would have Blackacre in fee simple absolute.

• At common law, D's remainder would be destroyed and B would have Blackacre in fee simple absolute.

• At common law, Blackacre would escheat to the state.

Answer explanation

The correct answer is C. This problem requires the application of the Destructibility of Contingent Remainders Rule, which has been abrogated in almost all American jurisdictions but is apparently still being tested on bar exams. The rule indicates that if a remainder is still contingent upon the expiration of the previous estate (in other words, the remainder cannot yet be distributed), the remainder is destroyed and the estate reverts to the grantor. So, in this case, D has a contingent remainder that is destroyed when C dies. At that point, B has the estate back in fee simple absolute. B's interest makes answers A, B, and D incorrect.

Classify these interests at the time of conveyance in a valid deed: O grants and conveys Blackacre to A for life, then to B, but if B marries X, to C and his heirs.

• At the time of conveyance A has a life estate and B has an indefeasibly vested remainder in fee simple subject to executory limitation. C has a springing executory interest in fee simple absolute.

• At the time of conveyance A has a life estate and B has a vested remainder in fee simple subject to divestment and C has a shifting executory interest in fee simple absolute.

• At the time of conveyance A has a life estate, B has a contingent remainder in fee simple absolute and C has a contingent remainder in fee simple absolute.

• At the time of conveyance A has a life estate, B has a vested remainder in fee simple subject to divestment, and C has a springing executory interest in fee simple absolute.

Answer explanation

B is correct. A life estate is created in A with the words of limitation “for life.” The life estate is followed by a future interest in a transferee so it must be some type of remainder. While B is an ascertainable person, there is a divesting condition. B cannot marry X, which could happen any time and act as a condition precedent or subsequent. However, this condition is in a subsequent clause which is the correct pattern for a vested remainder in fee simple subject to divestment. Because of this pattern, C is incorrect because it classifies B’s interest as a contingent remainder. Also, A is incorrect because it classifies B’s interest as an indefeasibly vested remainder, which ignores the condition which could divest her of the interest. This means that C who is another transferee who has been given a future interest has a shifting executory interest in fee simple absolute. Although the condition on B could occur before she has the chance to take possession (condition precedent) or after she takes possession (condition subsequent), at the time of conveyance we classify based on the condition precedent and the fact that she could be divested of the interest before it ever becomes possessory. Because Obi Wan would be receiving possession by divesting B’s interest, he receives a shifting executory interest and not a springing one; thus D is incorrect.

G was very fond of her ancestral home, Blackacre, and wanted to make sure it stayed in the family forever. She granted Blackacre “to my nephew N for life, then to his heirs. Blackacre must not be sold but must remain in my family forever.” N has one child, J. A fast-food restaurant chain would like to buy whatever interest N has in Blackacre. Which of the following is true?

• If the jurisdiction followed the Rule in Shelley's Case, N would have a fee simple absolute in Blackacre.

• J has a vested remainder, subject to open.

• The fastfood chain will be unable to obtain any interest in Blackacre, due to the disabling restraint.

• The Rule Against Perpetuities renders the future interest here invalid.

Answer explanation

The correct answer is A. The Rule in Shelley's Case applies when there is a life estate in a person and a remainder in his/her heirs. The Rule in Shelley's Case promotes alienability because otherwise no one could buy the property until N died (because his heirs would not be ascertainable until then). Note, however, that most American jurisdictions have abolished this rule, so answer A specifies that it is true only IF the jurisdiction applies it. Answer B is not true; J has nothing at this point. N's heirs will be ascertained only on his death. If J dies before N, he will not be an heir. C is incorrect because most courts would strike down G's admonition that Blackacre not be sold as an unreasonable restraint on alienation. D is also incorrect because the N's heirs will be determined at N's death, so N is the validating life for this remainder.

O “grants and conveys Blackacre to A for life, then to B, but if B does not graduate from law school before A dies, then to A’s son S.” At the time of conveyance, all named individuals are alive. B has no plans to attend college or law school. At the time of conveyance, which option correctly states the interests created:

• A has a life estate. B has a vested remainder in fee simple subject to divestment. S has a shifting executory interest in fee simple absolute.

• A has a life estate. B has a vested remainder in fee simple subject to divestment. S has a springing executory interest in fee simple absolute.

• A has a life estate. B has a contingent remainder in fee simple absolute. O has a reversion in fee simple subject to executory limitation. S has a springing executory interest in fee simple absolute.

• A has a life estate. B has a contingent remainder in fee simple absolute. S has an alternative contingent remainder in fee simple absolute. O has a reversion in fee simple absolute.

Answer explanation

A is correct.

 

While B’s future interest following A’s life estate has a condition to be satisfied, it is in a subsequent clause. This eliminates the contingent remainder classification for B and makes it vested, but subject to divestment (or total divestment). This is why both C and D are incorrect as they classify as contingent remainders. S’s interest then cannot be any type of remainder because his interest is not going to follow a naturally ending estate but rather would be divesting B of her interest. Therefore, S’s interest is a shifting executory interest held in fee simple absolute because if S interest is divesting a prior grantee, not the original grantor which would lead to the springing classification. This is why B is incorrect, as it incorrectly classifies S’s interest as a springing executory interest.

O conveyed her property “to my partner A for life, then to my daughter B if then living.” Which one of the following is true?

• B has a contingent remainder.

• B has a vested remainder.

• B has an executory interest.

• O has a possibility of reverter.

Answer explanation

The correct answer is A. B's interest is a future interest because it follows A's life estate. It is a remainder because it follows the natural termination of the preceding estate (i.e., it does not cut short A's estate upon the happening of some event, which is why it is not an executory interest, making answer C incorrect). It is subject to a condition precedent; however, B must be alive to take. Therefore, the remainder is contingent, not vested, which is why answer B is incorrect. Answer D is incorrect because O has a reversion, not a possibility of reverter. A possibility of reverter follows a fee simple determinable, which is not the estate at issue here.

O conveyed property “to my son A for life, then to A's children.” At the time of conveyance, A is alive and has two children, K and J, in high school. Which one of the following is true?

• K and J have an executory interest.

• K and J have a vested remainder, subject to open.

• K and J have a contingent remainder.

• The future interest in K and J is void under the Rule Against Perpetuities.

Answer explanation

The correct answer is B. The children's interest follows the natural termination of the preceding life estate, so it is a remainder. It is not triggered by a stated event and is therefore not an executory interest, making answer A incorrect. It is a class gift and all it takes to join the class (and thereby acquire a vested interest) is to be a child of A. So K and J have a vested remainder, but it is subject to open because more children could be born and join the class. (Some call this “subject to partial divestment.”) Since the remainder is vested, answer option C is incorrect. Answer D is incorrect because the remainder is valid under the Rule: you ask “when will we know who all the takers are?” When A dies, the class will close. So, because A is a life in being at the creation of the interest, the future interest is good under the Rule.

O conveyed property in trust to be distributed "to my daughter A's first child to graduate from college.” At the time of conveyance, A is alive and has two children, X and Y, who are in high school. Which of the following is true?

• X and Y have a vested remainder, subject to open, valid under the Rule Against Perpetuities.

• X and Y have a contingent remainder, void under the Rule Against Perpetuities.

• O's attempt to create an executory interest is valid under the Rule Against Perpetuities.

• O's attempt to create an executory interest is void under the Rule Against Perpetuities.

Answer explanation

The correct answer is D. O has attempted to create a springing executory interest in A's first child to graduate from college. It is an executory interest because it cuts short the previous estate (in O) upon the happening of some event (A's child graduating from college). Therefore, answers A and B can't be correct. In fact, X and Y have nothing until they actually meet the condition. However, O's attempt to create an executory interest is void because we will not know who the potential takers are until A dies, and then we will not know if they graduate from college within 21 years after that. We can't use X and Y as validating lives because they may not be the takers; A could have another child, years from now, who may be the first one to graduate from college. So, the interest is void under the Rule. Consequently, answer C is incorrect.

O executed a will that devised his farm Redacre “to A so long as the property is used to provide medical care for farm animals, but if it ever ceases to be so used, to Adelphi County.”

 

True or False: At O’s death, Adelphi County owns a vested remainder in fee simple determinable.

• True, because of the durational language used in the grant.

• True, because the property is still being used for medical care.

• False, because the County’s remainder is contingent upon the property being used for medical care for farm animals.

• False, because the County’s interest is not a remainder.

Answer explanation

The correct answer is (D). This question requires students to distinguish between remainders and other possible future interests. A remainder is a future interest that may become active upon the natural expiration of the prior estate. The future interest here is not a remainder, because the County’s interest can prematurely terminate A’s interest. (A), (B), and (C) are, therefore, incorrect. The future interest here is not a possibility of reverter because the possibility of reverter applies only to future interests retained by the transferor. The County holds a shifting executory interest in fee simple.

On December 16, 2018, A conveyed a lot “to the City for the life of George Lucas, remainder to the Lucas Museum of Narrative Art, but if said lot is not used for a permanent exhibition of the original Death Star, then the same shall revert to owner.”

 

What interest did the Museum acquire?

• Fee simple determinable

• Fee simple subject to a condition subsequent

• Fee simple absolute

• None of the above

Answer explanation

The correct answer is (D). The Museum acquired a vested remainder subject to divestment, a future interest. (A), (B), and (C) are incorrect because each names a present possessory interest. The only present possessory interest in this grant is the life estate pur autre vie to the City for the life of Lucas.