Legal Definitions - Vested

The term Vested describes a situation where someone has an absolute, secure, and unconditional right or entitlement to an asset, benefit, or privilege. This right is firm and cannot be taken away, even if the person won't fully receive or enjoy it until a later time or event. Essentially, all necessary conditions to establish the right have been met, making it a guaranteed entitlement.

• Example 1: Retirement Plan Contributions

  Imagine an employee who participates in a company's retirement savings plan. The company contributes a percentage of their salary, but these contributions only become fully vested after five years of continuous employment.

  Once the employee completes five years, their right to those company contributions is vested. This means they have an absolute and unconditional entitlement to that money, even if they leave the company the very next day. While they might not be able to withdraw the funds until retirement age, the right to receive them is now secure and cannot be taken away.

• Example 2: Inheritance Through a Trust

  Consider a trust fund established by a grandparent for their grandchild. The trust specifies that the grandchild's right to the funds becomes vested when they turn 21 years old.

  On the grandchild's 21st birthday, their right to the trust's assets becomes vested. This means they now have an absolute and unconditional legal claim to those funds. Even if the actual distribution of the money is delayed for administrative reasons or until a later age (e.g., 25), the underlying right to the inheritance is secure and cannot be revoked once they reach 21.

• Example 3: Property Easement

  A homeowner grants their neighbor a permanent easement to use a specific portion of their driveway to access a shared garage. This easement is formally documented and recorded with the property deed.

  Once the easement is properly granted and recorded, the neighbor's right to use that portion of the driveway is vested. This means it is an absolute and unconditional right that cannot be unilaterally revoked by the homeowner, even if they later change their mind or sell the property. The right is now a permanent attachment to the neighbor's property.