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Becoming knowledgeable about estate planning can help anyone. Whether one is a client or attorney, estate planning is a complex field and getting one term wrong can be a mistake worth millions of dollars. It is incredibly important to learn all one can about the business of estate planning and apply that knowledge to one’s own situation.
It is important to thoroughly understand executory interests within the field of estate planning. An executory interest is a future interest that follows a determinable estate. An executory interest is a future interest in a grantee, not the grantor. When a future interest follows a determinable estate and is in the grantor, then that is called a possibility of reverter.
When estate planning, clients often want to add more than one future interest to an estate. This is not a difficult task to do, even though it may seem like it could become a complex ordeal. One usually treats this sort of situation with the same analysis that goes into creating ordinary estates.
It is very beneficial to understand the difference between shifting executory interests and springing executory interests. To start with definitions, shifting executory interests are defined as interests that follow an estate in a grantee. Springing executory interests divest an estate in the grantor.
An example of a shifting executory interest can be found in the following language: A to B, provided that if B ever allows (xyz to occur), then to C. In this example, we can see many things going on. First, B has a possessory estate in fee simple. Recall that a fee simple is a type of possessory estate that has no inherent ending and is the largest type of possessory estate. Next, it can be seen that B’s fee simple is subject to an executory limitation. Because B’s fee simple is subject to an executory limitation, C’s future interest is an executory interest. Since the interest would divest B as a grantee, then it is a shifting executory interest.
Now it is important to consider a springing executory interest. A springing executory interest always divests the grantor, not the grantee. An example of a springing executory interest can be found in the following language: A to B when he turns 21. In this case, A has a possessory estate in fee simple. The executory interest can be found in B.
Overall, these concepts are important to know for creating precise estate plans with executory interests.
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