- If there is no other vested interest between the life estate and the remainder, the interests will merge
- b. RISC is a rule of law, the rule applies regardless of the clarity of the transferor’s intent to create a remainder in the heirs of the life tenant
- 6. Gifts to “A and Her/His Children” – Rule in Wild’s Case
- a. “To A and her children” contains an inherent ambiguity as to who takes what interest
- CL established in Wild’s case is that A and her children take as tenants in common
- Under modern trend, some courts construe this type of gift as convening a life estate to A, remainder to the children
- 7. Class Closing Rules
- a. A class, by definition, is a generic description of a group of individuals who share a common characteristic
- Ex. Gift to A’s children (but A may have future children)
- Description of the common characteristic is such that other people holding that characteristic may enter the class
- b. CL Rule of Convenience
- As soon as one member of the class legally has the right to receives, posses, and/or enjoy his or her share of the property, class legally closes
- 1. Based upon the transferor’s presumed intent, and not rule of law
- Closing a class under this rule does not mean that all of those who are included in the class will necessarily receive a share of the property
- 1. Class may close, but the class may still be contingent as to some members of the class and if any one of them does not satisfy the express condition precedent, they do not share in the property
- c. Direct/Immediate Gifts
- When a written instrument (typically a will) provides for an outright gift to a class of beneficiaries, the class closes upon the death of the transferor/testator
- 1. Exception – where no member of the class was born before the transferor’s death, it is presumed that the transferor knew the is and still made the gift
- a. Here, the rule of convenience does not apply and the class is held open until it closes naturally, the death of the designated party who controls access to the class
- d. Future interests/Postponed Gifts
- Where the written instrument creates a future interest in a class, first ask
- 1. Is the gift of (1) income or (2) principal
- Gifts of Income: Where gift is a periodic payment of income, the class closes upon each periodic date for distribution of the income
- 1. Bc no beneficiary is entitled to distribution of any income until the designated date for distribution, the class cannot be closed until then
- 2. Class auto reopens for the duration for the next payment period
- Gifts of Principal: Where a gift is a one-time disbursement of principal, earliest the class will close is at the end of the preceding estate if at least one member of the class is entitled to distribution – one interest has vested
- 1. Even if that member is dead, if the interest is transmissible or pass via anti-lapse to his issue, future interest has technically vested
- 2. If the gift is to the children of a designated person who had not had any children yet, the rule appears to be that the exception that applies to outright gifts applies to future interests
- Where a trust fails to provide for how the income is to be treated, default is against holding and accumulating the income
- 1. Income is distributable to beneficiaries on a regular basis as income accrues