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79 Cards in this Set
- Front
- Back
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Dynastic Trusts/Fee tail
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Now obsolete in US. This allows those who have concentrated generations of wealth to keep their property in trusts for a very long time. This is what the wealthy use to protect from taxes creditors and shield themselves from liability.
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Mountain Brow Lodge v Tuscano
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(Facts: Property conveyed to grantee with the restrictions: restraint on alienation and only for the use and the benefit of the second party.) Tension between grantor intent and statutes. The court must do everything they can to uphold the grantor’s intent. Functional approach of combining intent with law. 1. Thus make it a FSSCS despite the wording as FSD bc law not allow FSD. 2. Strike ROA but keep restraints on land use which in turn lead to ROA indirectly, thus upholding grantor intent. Today, modern law will not allow a functional ROA either.
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Reversion
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Future interest in the original grantor (or heirs), the only limitation is that the reversion is not possessory. The reversion lasts for ever.
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Power of Termination
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Ability to Terminate FSSCS. With condition, deem them to be vested (although they will probably never come into possession).
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Steps grantor must take to invoke Power of Termination
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1. Filing a suit, and proving that condition violated will suffice. 2. In some circumstances a letter will suffice, better to file a suit.
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Affirmative waste
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Involving direct and voluntary waste.
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Ameliorative Waste
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Increasing the value of the land. Only actionable if the grantor intended no charge in use and it can no longer be used in the manner intended by grantor.
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Ancestors
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Parents, grandparents, great grandparents.
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Baker v Weedon
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(John wants Anna, his love, to have a LE and when she dies, if she has no kids, the property should go to his grandchildren. Anna is starving.) A wants to transmute the land so that she can derive income, but John's grandkids who are the contingent remainder do not want her to sell. The court had to minimize waste so that the property will benefit 100% of its owners so it remanded for further exploration about how to avoid transmuting all of the property. Note: The court forgot the reversion. Bad.
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Beneficiaries of Trust
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Enjoy the trust, but all power goes to trustee.
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Bifrucates Title
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Breaks up title into parts, ie: trustee and beneficiaries
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California's restrictions on Defeasible Estates
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Cal Prohibits: 1. FSD/reverter 2. ROA 3. NPC: Cannot sell land 4. Judicial disregard of a grantor’s language. Cal Allows: 1. FSSCS/Power of Termination 2. Restricting land use 3. Judicial interpretation.
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Characteristics of FSA
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1. Alienable (can be sold) 2. Inheritable (if you die without a will, then by statute that person’s heirs will get the property). 3. Divisable (one can write a will and pass this interest via the will, the right to devise).
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Chosen End
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The future interest holder must exercise the right to regain possession. Like cutting in line. Note converse of natural end.
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Collaterals
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person who is related to a person but is neither issue or descendant. They are sideways heir.
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condition precedent
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language that requires some condition to happen before the interest vests
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contingent remainder/words of purchase
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likely to become possesory-possibility 1. Words of purchase: O to A for life then at A’s funeral to B (because there is an extra step in the taking-- A gap in siesen).
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FSA Thaumaturgic Language
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1. “To A and his heirs” 2. “O to A” 3. “O to A Forever” (or similar durational language).
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Dead Hand Control/Owner’s Intent
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When a property owner comes up with a plan, that plan gets followed. Period. Ex. Beryl buck in Marin county.
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Defeasible Fees
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Fee that is subject to termination upon the happening of some future event. FSD, FSSCS
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Elements of trust
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(1) Conditional Gift (2) That comes with a set of instructions by the donor. (3) Which is managed by a trustee: distributing the benefit of the gift in strict accordance with the donor instructions.
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Equitable Life Estate/Words of Purchase
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A property interest owned for life, in the assets of a trust. “O to X in trust for A for life.”
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Equitable Title
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Given to the beneficiary. The beneficiary gets the happy job of simply enjoying the property.
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Executory Interest
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Divesting estate “rude person who cuts in line,” always has to cut someone out. At a chosen end. All elements of Grey’s Rule.
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Facts of Independent Significance
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If someone with a future interest wants to prove that their interest is likely to vest because of factors, they can submit these factors to the court for consideration.
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Fee Simple Absolute/ Words of Purchase
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FSA (Fee x) Infinity. Largest estate in our system. Transmutable.
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Fee Simple Determinable/Words of Purchase
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When a grantor intends to grant a fee simple only until a specified future event occurs. (Abolished in CA) (1)Durational, To A so long as, until, unless (2) language goes to the heart of the land use restriction. (3) possibility of reverter (4) deem it to be vested (5) natural end (6) remedy is ejectment Note: Fully transferable.
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Fee Simple Subject to Condition Subsequent/Words of Purchase
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When a grantor reserves the right of forfeiture upon the occurrence of some future specified event. (1) Conditional language, provided that, on condition, but if, (2) Power of Termination (3) not natural end (4) remedy is injunction/ejectment. Note: Fully transferable.
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Feudal Estates
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(1) There used to be a presumption of LE. Now a presumption of a FSA. (2) There used to be a presumption of FSD now there is a presumption of FSSCS. (3) Used to prefer survivorship. Now do not.
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Future Interests: (In order by size/rank)
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Grantor’s Future Interests: i. Reversion. ii. Power of Termination iii. Possibility of reverter Grantee’s Future Interests: i. Vested remainders ii. Contingent Remainders iii. Executory Interests
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Gap in Seisin
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Condition precedent is not automatic, “if after A’s funeral.” Means will never meet second element of Grey’s rule (Springing/Shifting)
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Gray’s Rule
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Elements: (1) Ascertained Taker (Alive) (2) Not subject to condition precedent (Natural End)
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Heirs
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if a person dies intestate, then decedent’s property goes to descendant’s heirs.
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Heirs apparent
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heirs before you die, not ascertainable until you die
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Holographic Will
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Handwritten will. Becomes a legal document, and is equally as effective as a will created by an attorney in an office. Elements: handwritten, signed and dated.
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How the Court deals with ambiguous grants
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(1) Statutory limitations. (2) Read the language of the will to derive intent from Case law (3) Functional limitations: If there is a functional reason for the limitations connected to the grant, the court will attempt to uphold the grantor’s function within the letter of what the law allows.
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Hypothecate
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mortgage
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Intestacy statute
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The right of inheritability, only passes property to blood relatives (heirs). Hierarchy if one dies intestate: spouse, children, parents\collateral kin (brothers sisters, nieces, nephews, aunts, uncles), no heirs? Then the property will go to the state.
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Irrevocable Trust
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no more control, still derive benefit, beyond the reach of creditors
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Issue
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issue of your body, descendants
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Judicial Sale to remedy LE
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The court will sometimes sell a LE and divide the proceeds between the remainder interest holders and place the money in a trust for the LE holder to receive payments on bc courts like LE so little. (Transmutation) 1. This only occurs in cases of Equitable Necessity: If the sale is in the best interest of all parties. 2. Baker v Weedon.
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Legal Life Estate/Words of Purchase
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Bare estate that passes from owner to grantee, outside of a trust “O to A for Life”
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Life Estates/Words of Purchase
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Possesory estate that comes to a natural end when the grantee dies. Every LE creates a future interest, either a reversion in grantor or a remainder in grantee. "O to A for Life" Vested.
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Marenholz v County School Board of School Trustees
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(“This land to be used for school purposes only; otherwise to revert to Grantors herein.” The big question is what did the grantor intend to create?) FSD or FSSCS, if FSD then alienable and thus sold to M, but if FSSCS then not alienable without Power of Termination and did not invoke that right, to thus not sold to M.
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Natural end
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Time after which the next vested estate comes into possession. In LE when grantee dies. Note after the natural end the grantor has a cause of action for ejectment. Never Divests. Instant shift.
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Natural end of FSD
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When the condition is violated.
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Natural end of FSSCS
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No natural end bc the only to invoke Power of Termination is a law suit. Note the Power of Termination can expire by adverse possession after the Power of Termination has ripened.
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Permissive Waste
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Involuntary waste in which the tenant fails to upkeep or protect the property.
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Possessory Estate
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Right to possess the land now, and not in the future. Present possessory interest in Le = Possessory interest = LE grantee.
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Possibility of Reverter
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Ability to revert under FSD. (Future Interest in the grantor), with condition, deem them to be vested (although they will probably never come into possession)
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Reasons for a trust to end
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1) 25K or less can be terminated by the trustee 2) Traditional common law rule set in the amazing clathlan doctrine: if an owner’s intention is to set up a structure that will last until beneficiary is x years old, the trust cannot be terminated until the point in time set by it.
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Reasons why restraint on alienation is not allowed
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i. make property unmarketable ii. perpetuates concentration of wealth in land (ok with money) iii. discourage improvements of land iv. prevent owner’s creditors from touching property
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Remainder
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A future interest in the grantee(s). Not a divesting estate, it will come into P at some natural end of a prior estate without ever cutting anyone out. No elements of Grey’s Rule.
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Repose
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Rest is important to future interests because they are dynamic, so rest means that they are for a moment not changing.
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Restrains on Alienation: How Common Law Differs
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Same for partial and total ROA. Different bc the Functional ROA used to be allowed.
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Restraint on Alienation: Not in Trust
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Any time a restraint on alienation is used in a legal interest, it will be stricken.
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Restraint on Alienation: Trust
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If something is in a trust, then you can use total restraints on alienation in a trust. These restraints will be recognized when assigned to a trust.
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Restraints on Alienation: Modern Law
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Restrains grantee from selling the property they received. (1) Total ROA: Not allowed (2) Partial ROA: have to be reasonable (3) Functional ROA: Not allowed
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Revocable Trust
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control but can be touched by creditors
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Shift
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Grantee to 3rd Party, Only in executory interests.
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Simultaneous death act
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When a grantor includes survivorship conditions, the following analysis applies: (1) Who died first? 1/5800th of a second (2) Died at the same time? 50/50 In CA, rule that if someone is in this situation and they die intestate, then the survivor is the person who survives by 120 hours- 5 day rule.
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Spendthrift trust
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As a consequence, trusts can be drafted in such a way that beneficiaries have no power to spend the money at their discretion, and creditors have no power to reach those interests.
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Spring
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Original Grantor to 3rd Party, Only in executory interests.
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Surplus language
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Precatory Language, unnecessary, can sometimes muddle grantor intent
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Survivorship Conditions
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Modern Rule: Only explicit survivorship condition will be recognized bc of preference of repose. Calling these words surplus. Explicit :if B survives A."
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Survivorship Conditions Old Rule
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Survivorship condition language can be implicit in these other jurisdictions. If there is an ambiguity, then there can be an argument for a survivorship condition.
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Test to determine if we have reached repose
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Grey's rule. (Policy of Grey's rule is repose)
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Transferability and valuation of LE
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LE freely alienable but value is calculated using a specific formula that takes into account life expectancy, property value and projected interest accrued on the value of the land.
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Transmuting
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“change the character of” By agreement or action the married couple can turn (transmute) separate property into community property
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Trust
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Container, Way to make a conditional gift. Bifrucates title, creates a Legal FSA with no restrictions on the requirements of the trust, no ROA. By CA law must grow by 4% per annum
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Trustee
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We give the legal title (100% FSA) to a responsible person, and we call that responsible person the trustee.
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Trustee Powers/Duties
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Rights: Limited to grantor’s wishes, but extend to all rights in the bundle of rights: Sell, Improve, Repair, Make rules about, hypothecate, Lease, Protect, Destroy, Transmute. Duties: Fiduciary Duty, 16+ Duties Cal Law: trustee has no instructions, then 16+ duties apply.
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Vested remainder
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certain to become possesory (vested at the time of the grant), in FSA, 100% Certainty
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Vesting
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certain to come into possession at the death of A.
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Waste
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This is a consideration by the court in which it weighs the interests of all people who have an interest in property. When a tenant permanently impairs the property’s value or interest of the future interest holders: (1) Affirmative waste: (2) Permissive Waste (3) Ameliorative Waste:
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Which estates does the Law presume? Why?
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(1) FSA over LE b. Why? Restraints on Alienation. (2) FSSCS over FSD Why? Do not like automatic forfeiture which is part of FSD. Courts want to avoid- harsh. (3) Vested over non-vested- Grey's Rule Why? Repose (4) No Survivorship over Survivorship. Why? Repose
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White v Brown
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(White created a holographic will. I wish Evelyn to have my home not to be sold.) Issue: Did she want to give a she want to give a FSA with a restraint on alienation or a LE Evelyn? Intent unclear. Court decided that meant to give FSA and struck ROA bc of statutes creating presumption of FSA and restricting ROA.
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Will
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It is a private statute, and it is treated like law. A will supersedes the interstice statute.
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Will and disinheriting
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The purpose of a will is to transfer property—not to disinherit people. Therefore negative gifts are not allowed or recognized. If one wants to disinherit, then they need to give 100% elsewhere.
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