Understanding the Peculiarities of Fee Simple Determinable Interests

Introduction: Fee Simple Determinable as a Limited Interest

One of the major benefits of consulting with a qualified estate planning attorney is that estate planning attorneys are trained to think with the concepts and terminology which are unique to the law. The basic idea underlying estate planning – the intelligent planning for the distribution of one’s estate, as well as the preservation and maximization of that estate along the way – is rather straightforward, but the difficult aspect is learning to use all the language involved, language which is generally quite foreign to the typical person. Hiring a qualified attorney makes this process much easier, as your attorney can simply walk you through all this unfamiliar and sometimes difficult nomenclature.  

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Not too long ago, we discussed specific types of interests in property, such as “fee simple absolute” interests. These property interests are useful in the context of estate planning, as people frequently wish to leave specific property interests in certain assets to certain beneficiaries. In this post, we will discuss more of the details of so-called “fee simple determinable” interests.

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Fee Simple Determinable Interests are a Subset of “Defeasible Estates”

Unlike a fee simple absolute interest, a fee simple determinable is a type of limited interest in a given piece of property. More precisely, a fee simple determinable is a subset of “defeasible estates,” a term which is used to encompass multiple types of interest which are lesser than fee simple absolute. The other types of lesser interest are fee simple subject to condition subsequent and fee simple subject to an executory limitation. With a fee simple determinable interest, as with these other lesser types, there are invariably remainder or “future” interests involved, because the estate may revert back to another party automatically under certain conditions.

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Language to Create Fee Simple Determinable Interest

Whether a certain type of property interest – i.e. a fee simple or defeasible estate – be created depends on the particular language used in the granting document. In the case of a fee simple determinable, the language will identify an event or condition which will trigger the automatic cessation of ownership (and reversion to another beneficiary) when or if that event or condition occur. In other words, fee simple determinable interests are interests limited by either time, or the possible occurrence of an event.  

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One way to create such an interest would be with the following language: “Grantor transfers property A to beneficiary B as long as property A is used as an educational institution. If property A ceases to be used as an educational institution, property A will revert to beneficiary C.” There is a seemingly limitless number of permutations which could be used to create such a property interest; the critical ingredient is that the property interest is not absolute, but may be automatically transferred to another person at a certain time or with the occurrence of a certain event or condition.

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Utility / Applications for Maryland Estate Planning

Fee simple determinable interests are not something the ordinary Marylander knows about, but we can see quite easily how these interests may be useful in an estate planning context. Marylanders who want to bequeath property to a beneficiary, but want to ensure that the property is used for a particular purpose, or want to ensure that the property reverts to another beneficiary after a certain period of time, may find this property interest highly valuable. The tricky part will be developing the language which is exactly appropriate for the situation at hand. This is exactly where an experienced Maryland estate planning attorney comes into play.

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Contact the Murphy Law Firm for More Information

Readers who want to learn more about fee simple determinable interests, fee simple absolute interests, other property interests, trusts, or any other estate planning related topic, contact one of the estate planning attorneys at the Murphy Law Firm today by calling 240-219-5243.

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