§ 12.01 Future Interests in Context [151]

 

Complex rules govern the classification and enforcement of future interests.  These rules  arose out of the social and economic conditions prevailing in England after the decline of feudalism.

 

§ 12.02 What Is a Future Interest? [152]

 

A future interest is a nonpossessory interest that will—or may—become a possessory estate in the future.  For example, if O conveys land “to A for life,” O retains a future interest to retake possession when O dies.

 

§ 12.03 Why Create a Future Interest? [152-153]

 

Future interests are most commonly encountered in family gifts.  However, particularly in the nineteenth century, future interests were sometimes created for charitable or economic reasons.

 

§ 12.04 Types of Future Interests [153-155]

 

There are five basic types of future interests.  Three of them—the reversion, the possibility of reverter, and the right of entry—can only be created in a transferor.  The remaining two—the remainder and the executory interest—may be created only in a transferee.

 

§ 12.05 Classifying Future Interests: An Overview [155-156]

 

Classification is relatively easy when a deed or will creates a freehold estate that is followed by only one future interest, as the chart in the text indicates.  However, the process is more difficult when an estate is followed by multiple future interests.

 

§ 12.06 Common Law Approach to Future Interests [156-157]

 

Future interests present a clear example of the historic tension in English law between individual autonomy and social welfare.  The common law can be seen as a grudging compromise between these goals.  Future interests could be created, but were restricted by various devices.

 

§ 12.07 Modern Future Interest Legislation [157]

 

Many jurisdictions have simplified the common law approach to future interests through legislation, e.g., by merging the executory interest into the remainder or by weakening the Rule Against Perpetuities.

 

§ 12.08 Contemporary Relevance of Future Interests [157-158]

 

The importance of legal future interests in real property is declining.  However, equitable future interests are still used for estate planning involving personal property such as stocks and bonds.