The right to use property that you transfer by your will can be split between different people, based on the passage of time. One person (or group of people) can be given ownership of, or the right to use the property, while another person (or group of people) can be given the right to use the property at some future date. A person having the current use is said to have a "present" interest, while the second person is said to have a "future interest."

Within the context of split interests in property, there are two main types of present interests:

• Life interests: the person having the interest has full use and benefit of the property while he or she is living.
• Term for years: the person having the interest has full use and benefit of the property, but only for a specified time (for example, for 10 years).

There are two main types of future interests that are relevant to our discussion here:

• Remainder interests: these are the interests that follow the expiration the present interests (life interests, or terms for years). The persons receiving remainder interests will ultimately own the property outright (or their heirs will own it, if they die before the expiration of the present interests).
• Reversions: a reversion is a special form or remainder interest. It's created when the person who creates the life interest or term for years provides that he or she will get the property back once the present interests expire. (Within the context of a will, you would create a reversion if you provide that the property is to be returned to your estate once the present interests expire.) Two special kinds of future interests that are a lot like reversions are discussed under the topic of restrictions on property use.

Uses of split-interest bequests: Although split interest bequests can still be made by a will, it's often advantageous to have such interests structured within a trust arrangement. Doing so will normally reduce estate settlement costs, since a long-term continuing involvement of a probate court can be avoided.

 

The above discussion of split interests bequests is meant to show, in broad terms, the possible uses of split interest bequests. However, because a detailed discussion of this subject is beyond our scope here, and because the rules that apply to such interests vary from state to state, it is strongly advised that you consult an attorney if you want to use a split-interest bequest.