Estate planning attorneys must ask clients about property they own. This important information is gathered in questionnaires and during interviews.
“Property” is one of those terms that is often confusing because many people use the term colloquially in a sense which differs from its technical meaning.
All too often, the word “property” is understood to mean only real estate—land and any improvements such as homes, rentals, residential and commercial buildings, etc., and associated interests such as easements or right-of-ways.
In addition to immovable real estate (realty), “property” includes movable personal property (personalty), and this in turn can be either tangible things you can touch, or intangibles such as securities, notes, copyrights and patents, or legal causes of action.
“Property” refers to the thing to which certain rights attach.
“Interests” are the rights or “bundle of rights” in the property. Examples: possess, use, encumber, transfer, exclude others.
“Present interests” can be presently exercised.
“Future interests” can only be exercised upon a future event, at which time they become present interests. Future interests are “contingent” if the event is not certain to occur, and “vested” where the event is certain to occur.
A full bundle of rights is called “fee simple” or absolute ownership.
A “leasehold” terminates at a certain point in time.
A “life estate” terminates upon the death of a person, usually the interest-holder but possibly another person if drafted that way (“pur autre vie”).
A “remainder” is a future interest held by another after termination of a prior interest.
A “reversion” is a future interest held by the grantor after termination of the prior interest.
Fee simple title can be drafted in various ways to terminate fee simple ownership upon the happening of an event, leading to several forms of defeasible fee simple ownership.
The manner of taking title can affect values, and the services of a professional appraiser may be necessary in some cases.