A future interest in property law is a presently existing ownership right in property whose actual possession is delayed until a later date. The holder cannot occupy or use the property yet, but the law treats the interest as a real, protectable right, one that carries value, can often be sold or inherited, and gives the holder legal standing to prevent the current possessor from destroying what will eventually come to them.
There are six recognized future interests in American property law. Three can only be held by the original grantor, and three can only be held by a third party. Which one exists in any given deed or will is controlled by the exact words the drafter used.
Future Interests the Grantor Keeps
When an owner transfers less than everything they own, whatever slice they hold back falls into one of three categories.
Reversion
A reversion is the simplest. It arises automatically whenever someone transfers less than their full ownership without naming anyone to take at the end. The classic example is a grant “to A for life.” Once A dies, the property returns to the original owner or their estate because no one else was named. No special language creates it, and no action is needed to reclaim the property. It snaps back on its own.1Digital Commons @ Liberty University. New Reasons to Remember the Estate Taxation of Reversions
Possibility of Reverter
A possibility of reverter attaches to what lawyers call a fee simple determinable. This type of grant uses durational language like “as long as,” “until,” or “during.” A conveyance “to A as long as the land is used as a park” is the standard illustration. If A ever stops using the property as a park, ownership reverts to the grantor automatically, without any court action.2Legal Information Institute. Possibility of a Reverter
Right of Entry
A right of entry looks similar but behaves differently. It arises from conditional language like “but if” or “provided that,” creating a fee simple subject to a condition subsequent.3Legal Information Institute. Fee Simple Subject to a Condition Subsequent When the condition is violated, the property does not automatically return. The grantor has to affirmatively reclaim it by filing suit, re-entering, or taking other legal steps. Until the grantor acts, the current holder keeps possession.4Legal Information Institute. Right of Entry
That difference matters in practice. A grantor holding a right of entry who waits too long after a breach can lose the claim entirely. Statutes of limitations for re-entry actions range roughly from 5 to 40 years depending on the state, and many states have marketable title acts that automatically extinguish both possibilities of reverter and rights of entry after 30 to 50 years to clear old restrictions from land records.
Future Interests Created in Third Parties
When the grantor names someone other than themselves to take after a current interest ends, the resulting interest is one of three kinds.
Vested Remainders
A remainder is a future interest that becomes possessory when the preceding estate ends naturally. A vested remainder belongs to a specific, identifiable, living person and is not subject to any unmet condition. In a deed reading “to A for life, then to B,” B holds a vested remainder. B’s identity is known, and nothing needs to happen except A’s life estate ending.5Legal Information Institute. Vested Remainder
Contingent Remainders
A contingent remainder either goes to someone not yet identified or depends on a condition that has not yet been satisfied. “To A for life, then to A’s children” is contingent while A is childless, because the recipients cannot be named. “To A for life, then to B if B graduates from college” is contingent until B graduates.6Legal Information Institute. Contingent Remainder
Executory Interests
Executory interests are the most aggressive of the six. Unlike remainders, they do not wait for the prior estate to run out on its own. They cut the prior estate short when a triggering event occurs. A deed reading “to A, but if A ever sells alcohol on the premises, then to B” gives B an executory interest. The moment A violates the condition, B’s ownership takes effect automatically and A’s rights end.7Legal Information Institute. Executory Remainder
How the Wording of the Deed Decides Which Interest You Have
Small differences in phrasing lead to very different legal outcomes, so reading a deed or will carefully is the only way to know what type of interest exists. Courts generally presume a transfer conveys full, unconditional ownership unless restricting language appears in the document.
Durational words such as “as long as,” “until,” or “during” create a fee simple determinable, with a possibility of reverter in the grantor. Ownership returns automatically on breach.8Legal Information Institute. Fee Simple Determinable Conditional words such as “but if,” “provided that,” or “on the condition that” create a fee simple subject to a condition subsequent, with a right of entry that the grantor must exercise.3Legal Information Institute. Fee Simple Subject to a Condition Subsequent
Life estates are created with phrases like “to A for life,” followed by language naming who takes next. If no successor is named, the grantor keeps a reversion. If a specific person is named, that person holds a remainder.
Ambiguous drafting is where disputes start. A will reading “I give my farm to my daughter, and after her death it should go to her children” may or may not create an enforceable future interest depending on whether a court reads “should go” as mandatory or merely precatory. Poorly worded deeds routinely produce probate fights that cost tens of thousands of dollars in legal fees.
Protecting the Property While Someone Else Holds It
Holding an interest in property you cannot yet occupy creates an obvious problem: the current possessor could damage it. The doctrine of waste exists to protect future interest holders.
Voluntary waste is active harm, like demolishing a building or stripping timber. Permissive waste is failure to maintain, like ignoring a leaking roof until the structure fails. Both give the future interest holder grounds to sue for money damages or a court order stopping the conduct.
Ameliorative waste is the odd category. It covers changes that actually raise the property’s value, such as renovating a dilapidated structure. Traditionally, even value-increasing changes made without the future interest holder’s consent were actionable. The modern rule in most jurisdictions has shifted: if the property’s value did not decrease, the future interest holder generally cannot recover.9Legal Information Institute. Ameliorative Waste
Practical takeaway for anyone holding a future interest: document the property’s condition when the interest is created, and act quickly if you learn the current possessor is causing damage.
Can a Future Interest Be Sold or Reached by Creditors?
Most future interests are alienable, meaning the holder can sell, gift, or mortgage them before ever taking possession. Vested remainders and reversions are freely transferable in virtually every state. Even contingent interests can typically be passed to heirs through a will. These are real financial assets, not abstract legal fictions.
Value depends on how likely and how soon possession will actually arrive. A vested remainder following the life estate of an 85-year-old is worth far more than a contingent remainder that may never vest at all. Lenders who accept future interests as collateral typically apply steep discounts to reflect that uncertainty.
Creditors can reach some future interests. Federal tax liens attach to “all property and rights to property” belonging to a taxpayer, and the IRS has taken the position that this reaches future and contingent interests.10Office of the Law Revision Counsel. 26 USC 6321 – Lien for Taxes Whether a particular contingent remainder is actually attachable depends on how state law characterizes the interest. Courts have split, with some treating a contingent beneficiary as holding a present property right and others finding the interest too speculative to attach.11Internal Revenue Service. Federal Tax Liens
The Rule Against Perpetuities
Without limits, a property owner could create future interests that tied up land for centuries under the control of someone long dead. The Rule Against Perpetuities exists to prevent that.
Under the traditional common law version, a future interest is void if there is any possibility it might not vest within 21 years after the death of a relevant person alive when the interest was created.12Legal Information Institute. Rule Against Perpetuities The rule is notoriously tricky because it looks at what could theoretically happen, not at what actually happens. If a grant could conceivably fail to vest in time under any imaginable scenario, courts void it entirely, even where it would have vested in fact.
Reform has been widespread. About half the states adopted the Uniform Statutory Rule Against Perpetuities, which adds a 90-year “wait and see” alternative. If the interest actually vests within 90 years, it is valid; if not, a court can reform the grant to come as close to the grantor’s intent as possible. Roughly half the states have gone further and abolished or sharply limited the rule, particularly for property held in trust, permitting so-called dynasty trusts to run indefinitely. Because of this patchwork, the state where an interest is created matters a great deal. An interest that is valid in one state can be void in a neighbor.
One Tax Trap Worth Knowing
Future interests create tax complications, and one in particular catches people off guard. The federal gift tax annual exclusion, which lets you give up to $19,000 per recipient in 2026 without triggering gift tax, does not apply to gifts of future interests.13Internal Revenue Service. Gifts and Inheritances The statute expressly carves them out.14Office of the Law Revision Counsel. 26 USC 2503 – Taxable Gifts If you create a trust that gives your grandchild a remainder interest, the full value of that gift counts against your lifetime exemption from the first dollar. There is no $19,000 freebie.
The IRS also assigns a present dollar value to future interests using Section 7520 rates and actuarial mortality tables. The Section 7520 rate equals 120% of the applicable federal mid-term rate, rounded to the nearest two-tenths of a percent, and is published monthly.15Internal Revenue Service. Section 7520 Interest Rates Combined with mortality data, the rate produces a current value for a remainder or reversionary interest.16eCFR. 26 CFR 1.7520-1 – Valuation of Annuities, Unitrust Interests, Interests for Life or Terms of Years, and Remainder or Reversionary Interests The timing of a transfer can meaningfully change how much gift or estate tax is owed.
Anyone creating, transferring, or inheriting a future interest should get advice from a lawyer or tax professional before signing anything. The interaction between property law classifications and federal tax rules is complicated enough, and the stakes are high enough, that professional fees are usually the cheapest part of the transaction.