A beneficiary of a trust has a vested interest if he does not have to meet any conditions for his interest to take effect.
The interest may be:
- Vested in possession, if it is a “present right to present enjoyment”, such as an immediate right to income.
- Vested in interest, if it is a “present right to future enjoyment”, such as a right to capital which is ready to take effect when another beneficiary’s interest ends.
If a beneficiary has to meet a condition (such as surviving to a certain age, eg. 25 years, or surviving another beneficiary) he has a contingent interest, not a vested interest. When he meets the condition, his interest vests.