Future Interests

Begin with the grant's timeline

A future interest is a present property right to possess land later. Read the conveyance from beginning to end and mark each estate, holder, condition and event that changes possession. Do not begin with the Rule Against Perpetuities or a label. First determine what the grant creates under the words actually used.

For example, ‘to A for life, then to B’ gives A a life estate and B a remainder. The grantor has no future interest because the property is fully disposed of. ‘To A for life, then to the first of A's children to reach 25’ creates a remainder that may depend on a condition precedent and an unborn class member.

Interests retained by the grantor

The grantor may retain a possibility of reverter after a fee simple determinable, a right of entry after a fee simple subject to condition subsequent, or a reversion after conveying a lesser estate such as a life estate. A fee simple determinable ends automatically when its stated limitation occurs. A condition subsequent does not automatically end the estate; the grantor must exercise the right of entry.

Words such as ‘so long as’ or ‘until’ often signal a determinable limitation. ‘But if’ or ‘on condition that’ often signals a condition subsequent, though exact language and jurisdictional law matter. The important distinction is automatic termination versus a retained power to reclaim.

Remainders and executory interests

A remainder follows a prior estate of known duration and becomes possessory when that estate naturally expires. It does not cut short the prior estate. A contingent remainder is held by an unascertained person or subject to an unsatisfied condition precedent. A vested remainder is held by an ascertained person and is not subject to a condition precedent, although it may be subject to later divestment or open to let in additional class members.

An executory interest divests or cuts short a preceding estate. In ‘to A, but if the land is used for a bar, then to B,’ B's interest becomes possessory by cutting short A's fee if the stated event occurs. Distinguish this from a remainder that waits for a life estate to end.

Vested remainders and class gifts

A vested remainder subject to open is held by at least one ascertained class member, while other people may join the class. ‘To A for life, then to A's children’ can create a class gift that opens if A has a child while A is alive. The share of an existing child may shrink as more class members are born, but the interest is not contingent merely because the class is open.

A vested remainder subject to divestment is presently vested but may be cut off by a later condition. ‘To A for life, then to B, but if B does not survive A, to C’ gives B an interest that may be divested if the stated event occurs. The precise classification matters for transfer, future events and perpetuities analysis.

Rule Against Perpetuities

For the traditional common-law rule, a nonvested interest is invalid unless it must vest or fail, if at all, within 21 years after a relevant life in being at the interest's creation. The rule targets uncertainty about vesting, not remote future possession after an interest has already vested. A vested remainder can become possessory centuries later without violating the rule.

Identify the interest subject to the rule, select lives in being who can affect vesting, and test the worst possible scenario. If there is any possible scenario in which vesting occurs too late, the interest is void under the traditional rule. Many jurisdictions have modified the common-law rule, and the MBE may state the applicable statutory or common-law approach.

A class gift can create a class-closing problem: one member's interest may vest while another possible member could be born too late. Close the class under the rule of convenience when a member can demand possession, where appropriate, and then analyze perpetuities. Avoid assuming that a currently living child is the only possible class member.

A reliable classification method

1. Identify the present estate and its natural endpoint.
2. Ask whether the future interest is kept by the grantor or given to a transferee.
3. For a transferee interest, decide whether it waits for natural termination or cuts short the prior estate.
4. For a remainder, test ascertainability and conditions precedent to distinguish vested from contingent.
5. Classify any open class or later divesting condition precisely.
6. Only then test nonvested interests under the governing perpetuities rule.

The best answer is often obtained by diagramming possession over time. Write the grant in plain language, identify what must happen before the future holder can possess, and check whether the condition is precedent or subsequent. This prevents labels from replacing analysis.

Read the grant and locate each future interest

Future interests are present property rights that become possessory later. Start by identifying the estate given to the first taker, any condition or duration, and who holds the next interest. A future interest can be vested even though enjoyment is postponed, and an interest can be contingent even when the triggering event seems likely. Classify the words of the conveyance before applying a rule against perpetuities or transfer rule.

“To A for life, then to B” gives A a life estate and B a vested remainder if B is an identifiable living person and no condition must be satisfied first. “To A for life, then to B if B graduates from law school” gives B a contingent remainder if graduation is a condition precedent. If B already graduated before the conveyance, the condition is satisfied and the remainder may be vested, subject to any other language.

Remainders and executory interests

A remainder waits patiently for a natural expiration of the prior estate, such as the end of a life estate. It is vested if given to an ascertained person with no condition precedent; it may still be subject to open or divestment. A contingent remainder is given to an unascertained person or subject to a condition precedent. An executory interest instead cuts short another estate or divests a prior interest when its condition occurs.

“To A for life, then to B if B survives A, otherwise to C” gives B and C alternative contingent remainders under the traditional analysis because survivorship is a condition precedent. If the grant says “to A for life, then to B, but if B does not survive A, to C,” B may have a vested remainder subject to divestment and C an executory interest. The difference between “if” and “but if” is not magic by itself; read the whole instrument and ask whether the condition precedes vesting or cuts off an already vested interest.

A remainder cannot ordinarily follow a fee simple determinable or fee simple subject to condition subsequent as a remainder; the transferor retains a possibility of reverter or right of entry, or a third party may hold an executory interest. For example, “to the school so long as used for education, then to the city” gives the city a shifting executory interest because it divests the school's fee when the stated use ends.

Class gifts and closing the class

A class gift is made to a group, such as “A's children,” with shares determined by membership. The class can remain open while another person may qualify. The rule of convenience often closes the class when a member is entitled to distribution, but a gift's language or postponement can alter the result. A child conceived but not yet born can generally qualify as a class member under the applicable rule.

“To A for life, then to A's children” ordinarily gives the children a class remainder. If A has one child when the conveyance is made, that child's vested share may be subject to open because A could have another child. If distribution is postponed until A's death, later-born children may join before the class closes. Ask whether each member is vested, whether the class remains open, and how a later member affects existing shares.

Transferor interests and defeasible fees

A fee simple determinable ends automatically when its limitation occurs, leaving the transferor a possibility of reverter. Language such as “while,” “until” or “so long as” often signals automatic termination. A fee simple subject to condition subsequent continues until the transferor exercises a right of entry after breach; phrases such as “but if” and “grantor may reenter” often indicate that structure.

A fee simple subject to executory limitation ends automatically on the condition and passes to a third party who holds an executory interest. Compare: “to A so long as the land is a park, then to O” leaves O a possibility of reverter; “to A so long as a park, then to B” gives B an executory interest. The holder of the next interest determines the label and consequence.

The Rule Against Perpetuities and modern limits

At common law, the Rule Against Perpetuities invalidates certain contingent interests unless they must vest or fail, if at all, within 21 years after a life in being at creation. The inquiry is possibility, not probability. A remote possibility can invalidate an interest even if the likely outcome is prompt vesting. The rule generally applies to contingent remainders, executory interests and some class gifts, not to interests already vested or retained by the transferor.

“To A for life, then to A's grandchildren who reach 25” may create a problem if a grandchild can be born after the measuring life and reach 25 more than 21 years later. By contrast, “to A for life, then to A's children who reach 25” may be measured against A: A cannot have a child after A's death, and each child must reach or fail to reach 25 within 25 years, so the traditional rule still requires careful analysis because 25 exceeds the permitted 21-year period. Do not decide from likelihood or substitute a modern wait-and-see statute unless the question supplies it.

When applying the rule, identify the interest's creation time, the condition that must occur, a validating life, and the latest possible vesting date. If no validating life guarantees vesting or failure within the period, test the worst-case scenario. Many jurisdictions have modified or abolished the common-law rule, but a standard MBE question generally signals the governing approach or expects the traditional rule.

For a conveyance problem, draw the sequence of estates and label every interest before asking who owns the property now. Distinguish possession from vesting, automatic termination from a right to elect, and a condition precedent from a condition that divests. Those distinctions resolve most future-interest questions.