" (177) As with his income-to-A-for-life, remainder-to-B example, a two-generation trust with an indefeasibly vested remainder to a named individual is occasionally useful in law school casebooks and classroom presentations.
In any event, in analyzing his two-generation trust with an indefeasibly vested remainder to a named individual, Dukeminier assumes that the common-law Rule Against Perpetuities governs the case.
First, the trustee--not the holder of the vested remainder
interest subject to divestiture--is effectuating the alleged transfer.
Under a similar economic analysis, the IRS approves of granting Crummey powers to current income beneficiaries and persons with vested remainder interests because these persons must weigh the withdrawal right against their long-term economic interest in the trust.
To extend the gift tax benefit of Crummey powers to beneficiaries with interests more remote than current income or vested remainders would undermine significantly the unified system of estate and gift taxation which Congress intended, and would invite flagrant abuse in the future....
The creation of a vested remainder does not necessarily mean the remainder will pass through probate at the remainderman's death.
The Rule Against Perpetuities applies only to contingent interests, not to vested remainders. Remainders vested at common law but made contingent by section 2-707 may violate the Rule.
Beneficiaries with remote or attenuated interests in a Crummey trust (i.e., those without a current income or vested remainder
interest) will continue to raise a red flag for IRS challenge.
The homestead passes to the surviving spouse, estranged or not, for life with a vested remainder
in the lineal descendants of the homeowner living at his or her death, per stirpes.
It is now clear that beneficiaries need not have a vested income interest or a vested remainder
interest to be considered in possession of a present interest.
They emphasize distinguishing among contingent remainders, executory interests, and vested remainders
subject to divestment, and focus on the common law of estates in land and future interests in England in about 1700, covering future interests before and after 1536.
Then, later in the introduction, the authors state: The traditional categorization of possessory estates and future interests--that great structure of doctrinal nebulae: reversions, rights of entry, possibilities of reverter, vested remainders
, contingent remainders, and executory interests--developed in an England of aristocratic family dynasties and primogeniture, when the maintenance of feudal dues and seisin were still important, when competition between the courts of Chancery and of Common Law was most severe, when modes of conveyancing were still primitive and formal, and before the community had developed generalized notions of freedom of contract and private volition.