Definition
Future interest refers to an individual’s legal right to possess, use, or enjoy real or personal property at some point in the future. This interest is established in the present but does not grant current possession or enjoyment until a specified event occurs or conditions are met. For example, a legatee who is stipulated to receive income from a trust starting from the age of 21 has a future interest that will convert into a present interest upon reaching that age.
Examples
- Remainder Interest: John’s will states that his property will go to his daughter, Sarah, upon his wife’s death. Sarah has a future interest called a remainder interest, which will become a present interest when John’s wife passes away.
- Executory Interest: In a trust, if it stipulates that properties will transfer to Bob only if he graduates from college by age 25, Bob has an executory interest.
- Vested Interest in Trust: A 40-year-old trust states that the beneficiary, Susan, will inherit assets from the trust when she turns 50. Susan has a future vested interest in the trust’s assets.
Frequently Asked Questions (FAQs)
What is a future interest in property law?
Future interest in property law refers to the right to possess or enjoy a property in the future, based on terms set forth in a will, trust, or legal agreement.
When does a future interest become a present interest?
A future interest becomes a present interest when the conditions specified (such as reaching a certain age, death of a life tenant, or completion of an event) are met.
What are the types of future interest?
Types of future interest include remainder interests, executory interests, and vested interests.
Can future interest be transferred or sold?
Generally, future interests can be transferred or sold unless there are specific restrictions set by the original property owner or through legal stipulations.
Does a future interest have current value?
The value of a future interest depends on factors such as the probability of the condition being fulfilled, the timing, and the present value of the future benefits.
Related Terms
- Present Interest: Immediate rights to possess or enjoy property.
- Remainder Interest: A future interest given to a person (remainder beneficiary) which comes into effect after the end of a prior interest.
- Executory Interest: A future interest that will divest (cut short) another interest or some other interest in the future.
- Vested Interest: A secured interest in an asset or property that becomes available upon meeting certain conditions.
Online References
- Investopedia: Future Interest Definition
- Nolo’s Plain-English Law Dictionary: Future Interest
- Cornell Law School: Future Interest
Suggested Books for Further Studies
- “Future Interests” by John A. Borron Jr.
- “Wills, Trusts, and Estates” by Dukeminier, Sitkoff
- “The Law of Future Interests” by Lewis M. Simes
- “Understanding Property Law” by John G. Sprankling
Fundamentals of Future Interest: Property Law Basics Quiz
Thank you for exploring the concept of future interest in property law through our comprehensive glossary and challenging sample quiz questions. Continue to develop your expertise in estate planning and property law!