A future interest in property is a legal right to property that will commence at some point in the future. If someone holds a future interest, then they do not currently have the right to own or enjoy the property. Future interest is created when an estate has a “trigger” condition or event that transfers ownership of a property. One of the most common examples is seen in landlord-tenant relationships. When a person rents a house, the owner usually does not have the right to live or enjoy the house. However, upon termination of the lease, the owner will regain full title to the property. In this case, the owner has a future interest in the property. Future interest can usually be transferred through a sale, gift, or will.
There are six basic types:
- Future Interest with Possible Reverter – “James gave property to his son, Tommy, as long as he refrained from drinking alcohol.” This type occurs when an estate will return to the grantor if certain conditions are violated. Here, James has booked a future interest in the property that only sparks if and when Tommy drinks alcohol. If Tommy violates the terms, the property automatically reverts back to James.
- Future Interest with Re-entry Right – “James gave the property to Tommy, on the condition that Tommy refrain from drinking alcohol.” This type of interest is slightly different from the possible return because the giver (James) has choice to reclaim property for breach of conditions. Here, if Tommy drinks alcohol then Bob can choose to reclaim the property or not, it will not automatically transfer back to James if and when Tommy drinks.
- Future Interest in Transferees – “James gave the property to Tommy when he graduated from college.” This option assigns a future interest to the individual to whom the property is transferred. In this example, Tommy will receive property in the future, when he graduates from college.
- Future Interest with Remaining Insured – “To James for life, the rest to Tommy.” A remnant is one that became property at the end of the previous life of the estate, but is not subject to other conditions. Once the transferee’s interest has been granted, he or she is entitled to own it upon the death of the grantor. Furthermore, in this example, there is no requirement that Tommy outlive James. If Tommy is dead by the time James dies, the interest will go to Tommy’s heirs.
- Future Interest with Remaining Contingent – “To James for life, the rest to Tommy if he outlives James.” Contingent remnants are remnants that become property at the end of the previous life’s treasure, and subject to additional conditions. The transferee will only receive interest upon the death of the grantor if he or she has met the additional conditions. In the example, Tommy will receive his interest on the property when James dies, but only if Tommy is still alive at the time of James’ death.
- Future Flowers with Openable Leftovers if it belongs to a beneficiary class, where can that class develop. “James gave property to Tommy for life, then to Tommy’s children.” In this example, every child who lived before Tommy’s death has an interest in unlocking because Tommy has the potential to have more children.
