The purpose of a will or other estate planning document is to allow a person to legally transfer their property to a specific person or persons after their death. The law has been both written and interpreted to uphold the rights of the testator (person making the will) to give whatever they own to whomever they choose, as long as they made and signed the document of their own free will.
But sometimes, a person named as a beneficiary in a will may not want to inherit that particular property, which can happen for any number of reasons. So for those heirs named in the will of a person that is still alive, some may ask if they can transfer their future rights to that property to someone else. The answer is more complicated than most realize.
One of the most common building blocks of property and inheritance law is the right to transfer a future interest in whatever property they choose. When a person is named in writing as the one who will receive that property, this is referred to as a vested right that cannot be taken away by a third party. They then, in an intangible way, have a kind of legal right to that property.
But because this is a future interest, it also means that at any point before the property moves from a future interest to a present one, it can be revoked by the person intending to give it. Even though the beneficiary has a legal interest in the property, before the person dies they have nothing concrete to transfer.
If the will-maker is still alive, then no. As stated above, even though you may have a future interest set out in the will, the document does not go into effect until the will’s creator actually dies. So selling future rights to property is essentially selling rights to something that you may or may not ever own. The testator could revoke and rewrite the will completely and leave the property to someone. Also, they could choose to sell that property before they die, so if the property you want to transfer is gone, there would be nothing to give.
For example, if your uncle wants to give you a specific classic car that he owns, he can certainly name you the beneficiary in the will. But before he dies, he has every right to change the will to give it to someone else or sell it himself. The person you sold the “future rights” to is then left with nothing. Because of this, courts usually find these kinds of sales void when challenged before death.
But what if, for whatever reason, you did complete such a sale, and then the testator dies? Can you void the sale due to the rules stated above? Not necessarily. In some states, if you made a promise to the buyer to give them the property and they gave you valuable consideration (for example, cash) in return, then you have formed a valid contract with them.
Once the testator dies and the property is legally transferred to you, you cannot then claim that the sale is void. Your future interest is now a present interest, and it would be unfair to the buyer to let the seller avoid that contract because of the future interests rule. Under these circumstances, you must then transfer the property to the buyer. If you sell your future interest in your uncle’s car and he passes away with the will unchanged, that car now belongs to the buyer under basic contract law.
There are a number of reasons that people don’t want to inherit certain property. There could be tax concerns, legal entanglements, or an act of good will towards family. If selling or transferring my future interests isn’t allowed, what should you do? You can’t be forced to inherit property you don’t want, so you have the option to refuse to do so under the right of disclaimer.
Just make your wishes concrete through a signed and notarized document and deliver it to the person that will be in charge of distributing the estate, usually the executor. You cannot choose who gets that property instead, but you can ensure that legal ownership will not be transferred to you.
If you find yourself on the wrong end of a sale with future interests involved, you will need to contact a will attorney to help make it right. An experienced estate/contracts lawyer will know what your rights are and can help explain how the process works in your state.