Rule Against Perpetuities

The Rule Against Perpetuities is a legal doctrine that ensures no contingent interest in property is valid unless it vests not later than 21 years after the death of a specified person living when the interest was created. This rule prevents property from being indefinitely tied up within a family and limits control over future ownership.
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Definition

The Rule Against Perpetuities is a common law principle which states that no contingent interest in property is valid unless it must vest, if at all, not later than 21 years after the death of some life in being at the creation of the interest. The rule aims to prevent the indefinite tying up of property within a family and ensures reasonable limits on the duration of control over future ownership.

Examples

  1. Family Trusts: Suppose a grandparent creates a trust specifying that the income from the trust’s assets will go to their child for life, then to their grandchild for life, and finally to the grandchild’s first child. The Rule Against Perpetuities would void this clause if there is a possibility that the grandchild’s first child is not born within 21 years of the grandparent’s child’s death.

  2. Wills: A person makes a will leaving their estate to their grandchild but only after the grandchild’s marriage. If the grandchild is not yet born at the time of the person’s death, and they could marry more than 21 years after the person’s death, this clause would violate the Rule Against Perpetuities.

Frequently Asked Questions

1. Why was the Rule Against Perpetuities established?

  • The rule was established to prevent long-term restrictions on the transfer of property and to ensure that property remains marketable and within the stream of commerce.

2. What does it mean for an interest to “vest”?

  • An interest “vests” when it becomes the present property of a person, meaning they have a definitive and enforceable right to it.

3. How is the “life in being” determined?

  • A “life in being” refers to a person who is alive at the time the interest is created. It is often tied to the lives of specific, identifiable individuals mentioned in the legal instrument, such as a will or trust.

4. Are there any exceptions to the Rule Against Perpetuities?

  • Yes, some jurisdictions have adopted reforms, such as “wait and see” statutes or the Uniform Statutory Rule Against Perpetuities, that either modify or replace the common law rule.

5. What is the “21 years” period?

  • The “21 years” period refers to the additional time allowed after the death of the last identifiable person alive at the creation of the interest, during which the interest must vest.

Contingent Interest: An interest in property that will only become possessory upon the occurrence of a specified event that is not certain to occur.

Vesting: The point in time when an interest granted in property becomes the present legal right of a person.

Life in Being: A person who is alive at the time a contingent interest in property is created and whose lifespan is relevant to the application of the Rule Against Perpetuities.

Online Resources

Suggested Books for Further Studies

  • “Understanding Property Law” by John G. Sprankling
  • “Principles of Property Law” by Herbert Hovenkamp and Shelly Kurtz
  • “The Law of Property” by Dale A. Whitman, Ann Burkhart, R. Wilson Freyermuth, and Troy A. Rule
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