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Expectancy of Prospective Heir

An assignment is defined as an expression of intention by a person that his/her rights should pass to and be owned by another.[i] Case law distinguishes between an equitable and legal assignment.  The difference between these two types of assignments is that a legal assignment relates to a thing in being, whereas an equitable assignment relates to contingent interests, expectancies, and potential things.[ii]

At common law, the transfer of a mere possibility or expectancy, not coupled with an interest, is void.[iii] Mere expectancy cannot be sold or assigned.[iv] An assignment by a prospective heir or devisee of his expectancy of acquiring an estate by descent or devise is invalid and unenforceable at law.[v]

However, in equity, the courts will enforce an assignment or release of an expectant interest which is based on valuable consideration, made in good faith, and free from circumstances of fraud or oppression.[vi] Courts of equity uphold specific assignments of mere possibilities, based on valuable consideration, where the enforcement of the agreement would not contravene their own rules or public policy.[vii]

An assignment is valid in a number of jurisdictions by the application of the doctrine of estoppel by deed.  If one having no title to land conveys the same with warranty and afterward acquires a title and conveys to a stranger, the second grantee is estopped from claiming that the grantor was not seized at the time of his conveyance to the first grantee gives effect to the estoppel.[viii] A deed with full covenants of warranty estops the grantor from setting up any title subsequently acquired by him against the grantee and the subsequently acquired title inures by virtue of the estoppel to the grantee.[ix]

Contracts made by expectant heirs which purport to transfer expectancies or future interests which may come to them upon the death of an ancestor or relative is held to be enforceable in equity if they are:[x]

  • supported by adequate and fair considerations,
  • are free from vitiating elements,
  • if the surrounding facts and circumstances show no imposition on a necessitous heir, and
  • if the heir is sui juris.

A person, as heir to property, does not acquire a vested right to the property.  The right becomes vested at the death of the benefactor. However, a person can make an equitable assignment of his expectation of inheritance when adequate consideration is given to the assignor.[xi]

Although an interest in expectancy or possibility of reverter may be the subject of assignment, an attempt to assign an expectancy is against public policy and hence inoperative.[xii] However, if the ancestor through whom such expectancy may be derived assents to the same, then the assignment is valid.  The intention to make such an assignment must appear clearly and indisputably.[xiii]

The expectancy of a prospective heir of a living person may be released to the ancestor or assigned to a stranger.  In the case of a release to the ancestor, a court of equity will enforce the contract for the benefit of the other heirs.[xiv] A release by an heir presumptive of his expectancy operates as an extinguisher of the right of inheritance, cutting it off at its source.  The line of inheritance is cut off by the release made by the one having the expectancy at the time and the release is binding not only upon him but upon those who take as heirs in his place, otherwise a release would often be ineffective.  If however, the expectancy is assigned to another, the right of inheritance is not extinguished but still exists, and the assignment is enforced as a contract to convey the legal estate or interest when it ceases to be an expectancy and becomes a vested estate.[xv]

The transfer of a possibility of acquiring property by descent may be enforced by the heirs or next of kin of the transferee, as against the heirs of the grantor and all others claiming through him.[xvi]

[i] JOHNSON v. SCHICK, 1994 OK 109 (Okla. 1994)

[ii] Id

[iii] Scott v. First Nat’l Bank, 224 Md. 462, 465 (Md. 1961)

[iv] Avon State Bank v. Commercial & Sav. Bank, 49 S.D. 575 (S.D. 1926)

[v] Martin v. Smith, 404 So. 2d 341 (Ala. 1981)

[vi] Id

[vii] McAdams v. Bailey, 169 Ind. 518 (Ind. 1907)

[viii] McCusker v. McEvey, 9 R.I. 528 (R.I. 1870)

[ix] Russ v. Alpaugh, 118 Mass. 369 (Mass. 1875)

[x] Hofmeister v. Henter, 230 Wis. 81 (Wis. 1939)

[xi] JOHNSON v. SCHICK, 1994 OK 109 (Okla. 1994)

[xii] Farmers’ Loan & Trust Co. v. Wood, 78 Ind. App. 147 (Ind. Ct. App. 1922)

[xiii] Williams v. Thomas County, 208 Ga. 103 (Ga. 1951)

[xiv] Donough v. Garland, 269 Ill. 565 (Ill. 1915)

[xv] Id

[xvi] Keys v. Keys, 148 Md. 397 (Md. 1925)

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