Rule against perpetuities

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The rule against perpetuities is a rule in property law which prohibits a contingent grant or will from vesting outside a certain period of time. If there is a possibility of the estate vesting outside of the period, regardless of how remote, the whole interest is void, and is stricken from a grant. The rule is concerned with the utility of property and tries to prevent people from tying up assets for too long a period of time—a concept often referred to as control by the "dead hand." That is, the purpose is to "limit the testator's power to earmark gifts for remote descendants."Template:Fn Some argue that the rule also prevents the concentration of wealth in society.

1 The common law rule
2 Statutory modification
3 Problems with the rule
4 References
5 External link

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The common law rule

The Deluxe Eighth Edition of Black's Law Dictionary defines the rule against perpetuities as "[t]he common-law rule prohibiting a grant of an estate unless the interest must vest, if it all, no later than 21 years (plus a period of gestation to cover a posthumous birth) after the death of some person alive when the interest was created."

At common law, the length of time was fixed at 21 years after the death of an identifiable person alive at the time the interest was created. This is often expressed as "lives in being plus twenty-one years." Under the common-law rule, one does not look to whether an interest actually will vest more than 21 years after the lives in being. Instead, if there exists any possibility at the time of the grant, however unlikely or remote, that an interest will vest outside of the perpetuities period, the interest is void and is stricken from the grant.

There are several ways to avoid violating the rule. For example, a person could use a trust with a "measuring life" to ensure that the contingent interest (typically called a "remainder") vests in someone. This is often the case in large families. For instance, if a family has 12 children, they might write a grant using the 12th child as the "measuring life" to ensure the grant vests, but also endures for a sufficiently long time. There is also an exception to the rule that exempts grants to charities.

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Statutory modification

In order to avoid the complexities of the rule, many jurisdictions have statutes that either cancel out the rule entirely or put clearer limits on the period of time and who is affected by it.

About half of the states in the United States follow the Uniform Statutory Rule Against Perpetuities, which gives a grantor 90 years for the interest to vest. If the interest does not vest to some life in being within 90 years, the grant will be reformed judicially so that it does vest.

Other states follow a "wait and see approach," whereby if the interest does not vest within 21 years, the court will either reform the grant so it does or strike the clause that violates the rule.

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Problems with the rule

The application of this rule has proven to be difficult in certain situations. The difficulty comes from the problem of identifying who the "lives in being" are and the confusing rules that limit who they can be. For example, if there is any chance of "after-births," newborns who enter the "lives in being" category, then the whole group cannot be the "lives in being."

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Fertile Octogenarian

Furthermore, there is the legal fiction of the fertile octogenarian, which assumes that a living person, regardless of sex, age, or physical condition, will always be capable of having more children, thus allowing an interest to vest 21 years after all the lives in being at the time of the grant are dead. In certain places this assumption will be limited to a fixed age set by statute. Furthermore, many jurisdictions have discarded old common-law fictions such as the "fertile octogenarian."

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Unborn Widow

The problem of the unborn widow is a frequently used illustration of the Rule's complexities. Suppose that a woman, A, wants to devise her estate to her son B and his wife, and then to their children.

A's devise might look something like this:

To B for life, then to his widow, if any, for life, then to B's children then living.

Though this seems like a reasonable devise, it actually violates the Rule because there is a possibility, however remote, that the interest to "B's children then living" will vest more than 21 years after the deaths of all lives in being.

Suppose B is married without children at the time of the devise. Suppose further that B's wife were to die or B were to divorce. If B were to remarry to someone who was born after the devise, the new wife would not be a life in being at the time of the devise. Similarly, any children born to B and his new wife would also not be lives in being at the time of the devise. If B's new wife were to outlive him (making her his widow) and survive him by more than 21 years, then the interest to "B's children then living" would not vest until after the perpetuities period expired (21 years after the death of B, the only relevant life in being at the time of the devise), because only upon the death of the widow can one ascertain who are "B's children then living."

Alternately, if B is not married at the time of the devise and B were to get married afterwards, again the wife could not be a life in being since she is not identifiable at the time of the devise. Similarly to the previous case, she could outlive B by more than 21 years, voiding the grant to their children (who also could not be lives in being because they would have been born after the devise was made).

However, if the last interest were simply to B's children, rather than to B's children then living, it would vest upon B's death because at that time all of B's children would be ascertainable. In this instance, the devise would be valid under the Rule.

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Charity-to-charity Exception

The Rule never applies to conditions placed on a conveyance to a charity that, if violated, would convey the property to another charity. For example, a conveyance "to the Red Cross, so long as it operates an office on the property, but if it does not, then to the Roman Catholic Church" would be void against the Rule, except that both parties are charities. Even though the interest of the Church might not vest for hundreds of years, the conveyance would nonetheless be held valid. The exception, however, does not apply if the conveyance, upon violation of the condition, is not from one charity to another charity. Thus, a devise "to John Smith, so long as no one operates a liquor store on the premises, but if someone does operate a liquor store on the premises, then to the Roman Catholic Church" would violate the rule. The exception would not apply to the transfer from John Smith to the Roman Catholic Church because John Smith is not a charity.

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