Future Interest Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Future Interest, written in plain English, along with examples of how it is used.

What is Future Interest?

History and Meaning of Future Interest

Future interest, in law, refers to the right or entitlement to receive a property, asset, or benefit at some point in the future, contingent upon the occurrence or non-occurrence of certain events. Essentially, it is a legal interest that does not become possessory or effective until some future time. Future interests were first introduced during the reign of King Henry VIII in England to prevent landowners from evading property taxes by transferring their estates to other family members or dependents.

Examples of Future Interest

1. In a trust arrangement, a property owner may retain a life interest in the property while transferring the remainder of the interest to another party upon their death.
2. A property owner may grant a life estate to a tenant, with the remainder of the interest passing to a third party after the tenant's death.
3. In a will, a deceased person may leave their property to their children in trust until they reach a specific age, at which point they will receive the remainder interest.
4. A property owner may create a leasehold interest in a piece of real estate, with the leaseholder having the right to use and possess the property for a set period of time, after which the owner will regain possession.

Legal Terms Similar to Future Interest

1. Reversion - refers to the future interest retained by a grantor of property after transferring a lesser interest in the property to a grantee.
2. Remainder - refers to the future interest in a property that passes to a third party after the expiration of a prior interest, such as a life estate.
3. Contingent Interest - refers to a future interest that is dependent on the occurrence or non-occurrence of some future event or condition.