6. Types of trust interests

What is a vested interest?

A right to a property which requires no conditions to be met to be enforced

What if a beneficiary dies before receiving the property the vested interest is in?

The vested interest passes to their heir(s) or their estate

What is a contingent interest?

A right to a property which can be enforced only if a certain condition is met, such as reaching a particular age or surviving another person.; once the condition is met the interest becomes vested

What if the beneficiary never meets the condition of the contingent interest?

The interest fails

What does it mean if a vested interest is ‘in possession’?

The beneficiary has the right to immediate enjoyment of the trust property e.g. the life tenant in a successive interest trust

What does it mean if a vested interest is ‘in remainder’?

The beneficiary has to wait to receive the right to enjoyment of the trust property e.g. the remainderman in a successive interest trust

What does it mean if a vested interest is absolute?

The beneficiary is entitled to the entirety of the trust property, essentially full ‘ownership’ e.g. the remainderman in a successive interest trust

What does it mean if a vested interest is limited?

The beneficiary is entitled to less than full ‘ownership’, this may be the right to occupy the property or collect its income e.g. the life tenant in a successive interest trust