Paralegal Advanced Competency Exam (PACE) Practice Exam

What is a future interest in property?

1. An estate that currently exists

2. An estate that is to come into existence in the future

3. An immediate ownership of real estate

4. A temporary interest that expires

The correct answer is: An estate that is to come into existence in the future

A future interest in property refers to an estate that is not currently in possession but is expected to become possessory at a future date under certain conditions. This future interest can arise from various legal frameworks, such as when a property owner conveys property to another party but retains a future right to that property. For example, if a property owner transfers ownership to someone else but specifies that they will regain ownership after a specified time or upon the occurrence of a specific event, this creates a future interest. The party holding the future interest has the right to assume possession in the future, contingent upon those conditions being met. This is distinct from an immediate ownership which conveys current possessory rights and an estate that currently exists, as those terms imply immediate rights without any future projection. Similarly, a temporary interest expiring would not signify a future interest but rather a present, limited claim that ceases after a certain period. Thus, the definition highlights the nature of future interests being inherently about the potential for future possession rather than any current ownership rights.