Future interests in land, commonly known as remainders and reversions, are legal interests in real property that are created in instruments of conveyance and take effect in the future. These interests are distinct from present or current interests in land, known as estates in possession. Future interests can be contingent on the occurrence of a particular event or the passage of time and are often used in estate planning, land use planning, and property development.
Future Interests in Land: The Best Structure
Future interests are interests in land that are created now but will not take effect until some future time. They can be created by deed, will, or contract. The most common types of future interests are:
- Reversions are interests that remain in the grantor of a deed after the transfer of a lesser estate. For example, if you convey a life estate to your child, you will have a reversionary interest in the land after your child’s death.
- Remainders are interests that are created in a third person after the termination of a prior estate. For example, if you convey a life estate to your child and then a remainder to your grandchild, your grandchild will have a remainder interest in the land after your child’s death.
- Executory interests are interests that are created in a third person that will take effect only if a certain condition is met. For example, if you convey land to your child on the condition that the child does not sell the land during his or her lifetime, your child will have an executory interest in the land.
The best structure for future interests in land depends on the specific circumstances. However, there are some general principles that can be followed to create a valid future interest.
- The interest must be created in a writing. This is required by the Statute of Frauds.
- The interest must be vested or contingent. A vested interest is one that is certain to take effect. A contingent interest is one that is subject to a condition that may or may not occur.
- The interest must not violate the rule against perpetuities. This rule states that no interest in land is good unless it is certain to vest within a certain period of time. The period of time is usually measured by “lives in being” plus 21 years.
The following table summarizes the characteristics of the three main types of future interests:
| Type of Interest | How Created | Vested or Contingent | Subject to Rule Against Perpetuities? |
|---|---|---|---|
| Reversion | By operation of law | Vested | No |
| Remainder | By deed or will | May be vested or contingent | Yes |
| Executory Interest | By deed or will | Always contingent | Yes |
The following are some additional tips for creating future interests in land:
- Use clear and concise language. The document that creates the future interest should be easy to understand.
- Consider the tax consequences. Future interests can have significant tax consequences. It is important to consult with a tax advisor before creating a future interest.
- Get legal advice. It is always a good idea to consult with an attorney before creating a future interest. An attorney can help you to ensure that the future interest is created correctly and that it meets your specific needs.
Question 1:
What are future interests in land?
Answer:
Future interests in land are legal rights or interests in real property that will take effect or vest at some point in the future. They are created through legal instruments such as deeds or wills and can be classified based on their characteristics and timing.
Question 2:
How do future interests in land differ from present interests?
Answer:
Future interests differ from present interests in their timing and possession. Present interests convey immediate ownership or possession of the property, while future interests will only vest at a later time and may not confer immediate possession or enjoyment.
Question 3:
What are the common types of future interests in land?
Answer:
Common types of future interests include:
- Reversion: A reversion is a future interest in which the grantor (conveyor of property) retains a right to reacquire the property in the future if certain conditions are met.
- Remainder: A remainder is a future interest that is created in a conveyance and takes effect after the termination of a prior estate.
- Executory Interest: An executory interest is a future interest that does not follow a normal estate pattern and is created through a special form of conveyance that transfers a future interest that is subject to a condition or event.
And there you have it, folks! A crash course in future interests in land. I know, I know, it’s not the most exciting topic, but hey, it’s the law, and it’s important stuff. If you’re ever planning on buying or selling land, it pays to have a basic understanding of how these interests work. So, thanks for sticking with me through this legal labyrinth. If you have any other questions, feel free to reach out and ask away. And be sure to swing by again sometime. I’ll have more legal tidbits to share with you soon!