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Introduction: Fee Simple Absolute
Recently on our blog, we’ve discussed the different types of interests which can be held with respect to property. Property, such as real estate, can not only be held individually and jointly with others, it can also be held in different “levels,” or degrees of interest. Not all property interests are identical, and it is important for Marylanders to understand some of the differences between property interests. Let’s look at the example of a “fee simple absolute” interest.
When most people think of “ownership,” they naturally think of a fee simple absolute property interest. In other words, a fee simple absolute interest refers to the most commonly accepted notions of ownership. When a person holds a fee simple absolute interest, that person holds not only a present possessory interest, but also the ability to freely dispose of that interest at will. In other words, they not only hold the property in the present moment, but they can decide who will inherit the property when they pass away, or convey the property to someone else during their lifetime. There are no restrictions on how the property may be used, and so there is no possibility of the property interest “reverting” to someone else for any reason.
Fee Simple Subject to Condition Subsequent
A fee simple subject to condition subsequent is a lesser form of interest than fee simple absolute. A fee simple subject to condition subsequent essentially places a restriction on how a given piece of property may be used. For instance, the grantor (i.e. the original owner who transfers possession of the property) may transfer the property and insist that it be used for a specific purpose. An example of the language which might convey this type of interest would be the following: “to person B, but if person B does not use the property to build a church, then the grantor retains the right to enter the property and retake a fee simple absolute interest.” This language is often seen in wills, as decedents may prefer to insist that certain properties be used for specific purposes.
Fee Simple Determinable
A fee simple determinable is another type of lesser property interest which is quite similar to a fee simple subject to a condition subsequent. In this context, the word “determinable” derives from Old English and essentially means that the interest is certain to terminate at some point. Basically, with this type of interest, the recipient gains a present possessory interest which will automatically terminate and revert back to either the grantor or some other beneficiary when a certain event or condition occurs. In most cases, this event or condition always occurs, and so a holder of a fee simple determinable interest necessarily has a temporary possessory interest in the property. An example might be: “to person C until person C reaches the age of 30, at which point the property transfers to person D in fee simple absolute.”
Property Interests in Estate Planning
As we alluded to earlier, understanding the details on fee simple absolute interests and other interests in property can be beneficial for estate planning purposes. When property is conveyed via will, many people wish to convey specific property interests to specific beneficiaries; if this is indeed the goal, knowing the ins and outs of these various property interests is obviously quite useful. In many ways, conveying lesser property interests, like fee simple subject to condition subsequent, is similar to setting up a trust with restrictions on how trust assets may be used.
Contact the Murphy Law Firm for More Information
If readers want to learn more about property interests such as fee simple absolute, or other property interests, wills, estates, or any other related topic, contact one of the estate planning attorneys at the Murphy Law Firm today by calling 240-219-5243.
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