Reversion is a common practice. Futures interests are usually gifted, sold, willed, or handled by the beneficiary because they transfer ownership rights.
Future interest is the legal right to use or take possession of property at a future date upon certain conditional triggers. For instance, if a property owner grants a future interest to a family member for life, and the family member passes away, then the property is reverted to the original owner. Another example would be the same property owner passing the property to a cousin and then the cousin’s son after the cousin passes. Once the death occurs, the cousin’s son is granted ownership of the property automatically.
Vesting means transferring immediate right of enjoyment of an asset, in this case property. When someone has the right to vested asset it means that that interest can’t be taken away.
There are three kinds of vested interests:
– A future interest is indefeasibly vest if it’s recipient must legally take ownership at a future date.
– A future interest might occur due to another action occurring. This means that if certain conditions occur, it can change the outcome of the future interest agreement and the interest can go to another party. For instance, Paul sells land to Mary for life, then to Mary’s daughter, but if Mary stops farming, then the property goes to Jan. Mary’s daughter has ‘a vested remainder subject to divestment’, because she might not get the land title if her mother stops farming before Mary takes over.
– An interest being ‘subject to open’ means that it technically belongs to a group of recipients, and that group is legally allowed to expand. An example of this would be Paul passing on his land to Mary’s children. The ‘class’ of Mary’s children can’t be officially stopped from expanding, or closing, until 38 weeks after Paul’s death, so any living heirs are vested subject to open.
A person can also choose to alienate themselves of only of those interests that are guaranteed to vest. This policy is aligned with the notion that one is not allowed to sell something they don’t actually own.
