Executory interest (in property)

An executory interest is a type of future interest in property, held by a third-party transferee which extinguishes another’s interest, or commences after the natural termination of a preceding estate. An executory interest is any future interest held by a person other than the transferor which cannot be classified as a remainder.

There are two types of executory interest: springing and shifting.

• Springing executory interests transfer ownership from the grantor to a third party.
• Shifting executory interests transfer ownership from the grantee to a third party.

Below are some typical examples of executory interests:

1. X transfers ‘to A for life, and then to the heirs of A’. This transfer creates a springing executory interest for A’s heirs.
2. X transfers ‘to A for 200 years if he shall so long live, then to the heirs of A’. This transfer also creates a springing executory interest for A’s potential heirs.
3. X transfers ‘to A and his heirs five years from the date of this deed’. A has a springing executory interest.
4. X, when B is 16 years of age, transfers ‘to A for life, and after A’s death, to B and his heirs if B reaches 21 years of age’. B has a springing executory interest.
5. X transfers ‘to A and his heirs; but if A marries Y, to B and his heirs’. B has a shifting executory interest.
6. X transfers ‘to A, but if B receives a law degree, to B’. B has a shifting executory interest.