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Bloomberg Law


A deed drawn by his parents gave Kost a life tenancy with the remainder in his children. One child was bankrupt. Local law allowed the trustee in bankruptcy to sell vested but not contingent remainders. The trustee sold the bankrupt son’s remainder. The parties disputed whether the remainder was vested or contingent.


How should a court determine whether a remainder is vested or contingent?


Whether a remainder is vested or contingent depends upon the grammatical structure employed. If the condition is contained in the clause which creates the interest, then the interest will be interpreted as a contingent remainder. If the condition is stated in a clause separate from that which creates the interest, then it will be construed as a vested remainder subject to a condition subsequent.Abo Petroleum Corp. Amstutz (1979)


The Amstutzes conveyed a life estate to their children, with contingent remainders in their grandchildren, the defendants. The parents retained a reversionary interest. Later, the parents purported to convey the same property in fee simple absolute to their children. The children subsequently attempted to convey fee simple interests to the predecessors of the Abo Petroleum Corporation (plaintiff). The defendants argued that the first deed gave their parents only life estates.

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