Define: Future Property

Future Property
Future Property
Quick Summary of Future Property

Future property refers to property interests that will come into possession or enjoyment of an individual or entity at a later date, usually upon the occurrence of a specified event or condition. In legal terms, future property interests are often categorised into two main types: future interests in real property and future interests in personal property. Future interests in real property include various forms of ownership rights, such as remainders, reversions, and executory interests, which arise upon the expiration of a preceding estate or upon the occurrence of a specific event. Future interests in personal property may include contingent or vested interests in assets such as trusts, inheritances, or bequests that will be received by an individual or entity at a future time, typically upon the death of the property owner or the fulfilment of certain conditions specified in a legal document. Understanding future property interests is essential in estate planning, property transactions, and other legal matters involving the transfer or disposition of assets over time.

What is the dictionary definition of Future Property?
Dictionary Definition of Future Property

Property that a settlor expects to acquire but does not yet own. Any attempt to create a trust in future property will, in theory, fail. This is because a trust can never be constituted where the settlor has no title to transfer (i.e., to the trustee).

However, an existing equitable interest, so long as it is a vested interest, can be the subject matter of a trust even if its owner is entitled to no present benefit. For example, an individual with an interest in the remainder of some land parcel may create a trust in that interest, even though he presently receives no benefit. It is, in fact, precisely this scenario that should have unfolded in Re Ralli’s Will Trust (1964). Here the settlor failed to convey her life interest into the trust as covenanted, most likely because no one had realised that such an interest was capable of being conveyed.

Although one can’t create a trust for future property, one can enter into a covenant to constitute a trust with this subject matter once it becomes available. A covenant of this sort may even be enforceable by the intended beneficiaries in certain circumstances (see, e.g., the constitution of trusts).

For related discussions, see the constitution of trusts, Re Ellenborough (1903), and Re Ralli’s Will Trust (1964).

Full Definition Of Future Property

The concept of future property is a nuanced and complex aspect of property law that pertains to assets that a person expects to own or acquire in the future. Unlike present property, which is already in possession, future property is contingent upon certain events or conditions. The legal treatment of future property varies across jurisdictions, but this overview will focus on its principles and applications within the context of British law.

Definition and Nature of Future Property

Future property refers to any interest or asset that an individual expects to acquire or own in the future. This can include a wide range of potential assets, such as:

  • Future Inheritance: Property or assets that one expects to inherit upon the death of another.
  • Future Earnings: Income that is expected to be earned in the future.
  • Future Acquisitions: Property that one intends to purchase or acquire.
  • Contingent Interests: Interests in property that are dependent on the occurrence of a specific event.

The nature of future property is inherently speculative, as its actual acquisition is not guaranteed and may be subject to various legal and factual contingencies.

Legal Framework in British Law

Historical Context

The treatment of future property in British law has evolved over time. Historically, English common law was quite rigid in its handling of property interests, primarily focusing on present property and vested interests. The rigidity stemmed from the traditional principles of property law, which emphasised certainty and tangible ownership.

However, equity provided a more flexible approach, allowing for the recognition and enforcement of certain future interests through mechanisms like trusts and equitable assignments. The fusion of common law and equity, particularly the post-Judicature Acts of 1873–75, has allowed for a more comprehensive legal framework addressing future property.

Statutory Provisions

Several statutory provisions and legal instruments in British law address the concept of future property:

  • The Law of Property Act 1925: This act modernised and consolidated much of the property law in England and Wales. It provides mechanisms for dealing with various interests in property, including those that may be future interests.
  • The Wills Act 1837 governs the disposition of property upon death, which often includes future property anticipated through inheritance.
  • The Family Law Act of 1996 includes provisions that may impact future property in the context of family and matrimonial proceedings, particularly regarding financial settlements and property division.
  • The Bankruptcy Act 1986 addresses how future property is treated in the event of bankruptcy, particularly regarding the debtor’s future earnings and acquisitions.

Judicial Interpretations

British courts have contributed significantly to the understanding of future property through various rulings. Key principles established through case law include:

  • Assignment of Future Property: Courts have recognised the assignment of future property, provided the assignment is clear and there is valuable consideration. Equity regards as done that which ought to be done, thus allowing for the enforceability of such assignments once the future property comes into existence.
  • Trusts and Future Property: Trusts can be established to include future property. Once the property is acquired, it falls within the ambit of the trust.
  • Contingent Interests: Courts have upheld interests contingent upon future events, provided such interests are sufficiently defined and the contingency is likely to occur.

Practical Implications

Future Property in Estate Planning

Future property is a critical consideration in estate planning. Individuals often include future interests in their wills, expecting to leave assets they anticipate acquiring. Effective estate planning requires careful drafting to ensure that such future interests are clearly articulated and legally enforceable. This might involve:

  • Drafting of Wills: Including clear provisions for future property and contingent interests to ensure they are valid and enforceable upon death.
  • Use of Trusts: Setting up trusts to manage future property, particularly for minor beneficiaries or to address tax planning concerns.

Future Property in Family Law

In matrimonial proceedings, future property often becomes a point of contention, particularly in financial settlements. Courts consider:

  • Future Earnings: Potential future earnings of spouses, particularly when determining maintenance and child support.
  • Pension Rights: Future pension entitlements can be treated as future property and subject to division in divorce settlements.
  • Inheritance Prospects: While not always straightforward, expected inheritances can sometimes be factored into financial settlements.

Commercial Transactions

In commercial law, future property can be relevant in various contexts, such as:

  • Security Interests: Businesses may use future property as collateral for loans, with lenders securing an interest in property that the business expects to acquire.
  • Contracts for Sale: Agreements for the sale of goods or property often include provisions for future property, stipulating conditions under which future acquisitions will be transferred.

Challenges and Considerations

Uncertainty and Speculation

The speculative nature of future property poses significant challenges. Legal recognition and enforcement depend heavily on the likelihood of the property materialising. Courts and legal practitioners must navigate these uncertainties carefully.

Enforcement of Future Interests

Enforcing rights over future property can be complex. Legal mechanisms like equitable assignments and trusts offer solutions, but they require meticulous planning and drafting to ensure enforceability.

Policy Considerations

The treatment of future property intersects with broader policy considerations, particularly in areas like family law and bankruptcy. Balancing the rights of creditors, spouses, and heirs requires a nuanced approach that considers both the speculative nature of future property and the need for fairness and certainty.

Comparative Perspectives

The concept and treatment of future property are not unique to British law. Other common law jurisdictions, such as the United States, Australia, and Canada, have similar principles but may differ in specific statutory provisions and judicial interpretations. A comparative analysis reveals:

  • United States: Future property is recognised, particularly in the context of bankruptcy and family law. The Uniform Commercial Code (UCC) provides mechanisms for securing interests in future property.
  • Australia: Similar to British law, Australian law recognises future property, particularly through equitable assignments and trusts. Statutory frameworks address future interests in family law and bankruptcy.
  • Canada: Canadian law also recognises future property, with courts often relying on principles of equity to enforce assignments and interests.

Conclusion

Future property is a complex yet integral aspect of British property law, intersecting with various legal domains including estate planning, family law, and commercial transactions. The legal framework, shaped by a combination of statutory provisions and judicial interpretations, seeks to balance the speculative nature of future property with the need for legal certainty and fairness.

Effective handling of future property requires meticulous planning and a thorough understanding of both common law and equitable principles. As societal and economic conditions evolve, the legal treatment of future property will continue to adapt, reflecting changes in policy and practice.

By understanding the nuances of future property, legal practitioners can better advise their clients, ensuring that future interests are protected and enforceable within the bounds of British law.

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Disclaimer

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 7th June 2024.

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