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
-
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.
-
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
Fundamentals of Rule Against Perpetuities: Legal Doctrine Basics Quiz
### What is the primary purpose of the Rule Against Perpetuities?
- [ ] To ensure property taxes are paid on time.
- [ ] To keep property within one family indefinitely.
- [x] To prevent the indefinite tying up of property within families.
- [ ] To limit the number of heirs a person can have.
> **Explanation:** The primary purpose of the Rule Against Perpetuities is to prevent property from being indefinitely tied up within a family, thus ensuring property remains marketable and in the stream of commerce.
### What is the maximum time allowed for a contingent interest to vest under the Rule Against Perpetuities?
- [ ] 10 years
- [ ] 100 years
- [x] 21 years after the death of a specified person living when the interest was created.
- [ ] No time limit
> **Explanation:** A contingent interest must vest no later than 21 years after the death of some life in being at the creation of the interest, according to the Rule Against Perpetuities.
### How does the Rule Against Perpetuities define a "life in being"?
- [ ] Any person alive today.
- [ ] A person identified in a will or trust.
- [x] An individual alive at the time the interest is created who is relevant to the vesting of the interest.
- [ ] A future heir that can be born within 21 years.
> **Explanation:** A "life in being" refers to an individual who is alive at the time the interest is created and whose lifespan is relevant to the application of the Rule Against Perpetuities.
### What happens if a property interest does not vest within the period specified by the Rule Against Perpetuities?
- [ ] The interest is automatically valid.
- [ ] The interest becomes null and void.
- [x] The interest is considered invalid and unenforceable.
- [ ] The interest transfers to the state.
> **Explanation:** If a property interest does not vest within the period specified (21 years after the death of a relevant life in being), it is considered invalid and unenforceable under the Rule Against Perpetuities.
### Which of the following could invalidate a legal instrument under the Rule Against Perpetuities?
- [ ] Ensuring all heirs are over 21 years old.
- [x] Creating a trust that depends on events occurring more than 21 years after the death of a person alive when the interest was created.
- [ ] Limiting property inheritance to immediate family members.
- [ ] Writing a will without legal counsel.
> **Explanation:** Creating a trust or legal instrument that depends on events that could occur more than 21 years after the death of a person alive when the interest was created could violate the Rule Against Perpetuities, rendering it invalid.
### What legal doctrine prevents the indefinite tying up of property within families?
- [x] Rule Against Perpetuities
- [ ] Doctrine of Estates
- [ ] Doctrinal Rule of Descent
- [ ] Perpetuity Clauses
> **Explanation:** The Rule Against Perpetuities is the legal doctrine that prevents the indefinite tying up of property within families, ensuring that property remains transferable and marketable.
### How does the Uniform Statutory Rule Against Perpetuities (USRAP) modify the original rule?
- [ ] It limits vesting to 50 years regardless of the death of any individual.
- [ ] It extends the vesting period to 100 years.
- [x] It introduces a "wait and see" approach, allowing more flexibility in determining the validity of contingent interests.
- [ ] It abolishes the rule altogether.
> **Explanation:** The Uniform Statutory Rule Against Perpetuities (USRAP) introduces a "wait and see" approach, which offers more flexibility by allowing courts to wait and see if a contingency resolves within the permissible period before ruling a contingent interest invalid.
### Can the Rule Against Perpetuities apply to commercial transactions?
- [ ] No, it only applies to family property.
- [x] Yes, if the contingent interest does not vest timely.
- [ ] Only if specified by the transaction parties.
- [ ] Not under any circumstances.
> **Explanation:** Yes, the Rule Against Perpetuities can apply to commercial transactions. If a contingent interest within a commercial deal does not vest within the specified period, it can be invalidated just like any other property interest.
### What is the typical way to identify whether an interest violates the Rule Against Perpetuities?
- [x] By determining if the interest could vest beyond 21 years after the death of a life in being.
- [ ] By confirming the property is sold within a specified number of years.
- [ ] By measuring the property’s increase in value over time.
- [ ] By determining if all heirs are direct descendants.
> **Explanation:** The typical method to identify a Rule Against Perpetuities violation is by determining whether it is possible for the interest to vest beyond 21 years after the death of a life in being at the creation of the interest.
### What is a key result of the Rule Against Perpetuities in estate planning?
- [ ] It ensures all heirs receive equal shares.
- [ ] It guarantees property remains within the family.
- [x] It restricts long-term contingencies and promotes free transferability of property.
- [ ] It standardizes estate tax calculations.
> **Explanation:** The key result of the Rule Against Perpetuities in estate planning is that it restricts long-term contingencies and promotes the free transferability of property, thereby preventing properties from being tied up indefinitely.
Thank you for engaging with our structured analysis of the Rule Against Perpetuities and tackling our legal foundation quiz questions. Continue striving for excellence in your legal knowledge!
