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Future Interests In The Transferor

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Bloomberg Law

FUTURE INTERESTS IN THE TRANSFEROR A transferor who conveys (or wills) his property to another can retain part of his interest. Remember that ownership is measured by the duration of possession. Thus, if a person holding a fee simple absolute (i., infinite duration) transfers an estate of shorter duration (e., fee simple determinable, life estate, etc.), possession reverts to the transferor at the expiration of that estate. There are three types of future interests that a transferor can have.
Reversion A reversion in the transferor is automatically created if he transfers an estate of a shorter duration than the one he holds. At the expiration of the shorter estate, this future interest becomes possessory and the property reverts to the transferor.

Example: If B, who has a fee simple absolute, transfers a life estate to C, at C’s death the life estate terminates and possession of the land reverts to B. A transferor does not have to expressly reserve this future interest.
Divestment A reversion can be divested (i., extinguished). This occurs if the condition necessary for reversion cannot be met. For example, O grants “To B for life, then to C, if she outlives B” (B has a life estate). Two things can happen at B’s death. If C is dead, then possession reverts to O, because there are no other takers; but if C is alive, she takes possession in fee simple absolute and the reversion is extinguished.
Alienability A reversion is freely alienable (inter vivos), devisable or inheritable (there is also a possibility of escheat).

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