Rule against perpetuities

From Academic Kids

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 an possibility of the estate vesting outside of the period, regardless how remote, the whole interest is void, and is stricken from a grant. The rule is concerned with the utility of unused property and tries to prevent people from tieing 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".1 Some argue the rule also prevents the concentration of wealth in society.

At common law, the length of time is fixed at 21 years after the death of an indentifiable person alive at the time the interest was created. This is often expressed as "lives in being plus twenty one years". 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 effected by it.

About half of the states in the United States follow the United States 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 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.

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 are also charity exceptions to the rule that allow grants to charities to survive without violating the rule.

Contents

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", new borns who enter the "lives in being" category, then the whole group cannot be the "lives in being". Furthermore, there is a 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."

Unborn widow

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

A clause would look something like this:

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

Though it seems like a reasonable devise that would not offend the Rule, in this instance it does.

Suppose B was married without children at the time of the devise. This would mean that B or his wife are Lives in Being. If B's wife were to die or if B were to divorce his wife and then B were to remarry to someone who was born after the devise then the new wife could not be a life in being. As such, she could outlive B by more than 21 years and so the transfer to children would be outside the period, violating the Rule.

Alternately, if B was 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 was not identifiable at the time of the devise. Similarly to the previous case, she could outlive B by more than 21 years, voiding the devise.

Charity-to-charity exception

The Rule never applies to conditions placed on a conveyance to a charity that would convey the property to another charity. For example, a conveyance to the Red Cross, so long as they operate an office on the property, but if they do 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.

References

Note 1: Richard Posner Economic Analysis of the Law 2nd ed. (1977), sec. 18.7 at page 394.

External link

Navigation

Academic Kids Menu

  • Art and Cultures
    • Art (http://www.academickids.com/encyclopedia/index.php/Art)
    • Architecture (http://www.academickids.com/encyclopedia/index.php/Architecture)
    • Cultures (http://www.academickids.com/encyclopedia/index.php/Cultures)
    • Music (http://www.academickids.com/encyclopedia/index.php/Music)
    • Musical Instruments (http://academickids.com/encyclopedia/index.php/List_of_musical_instruments)
  • Biographies (http://www.academickids.com/encyclopedia/index.php/Biographies)
  • Clipart (http://www.academickids.com/encyclopedia/index.php/Clipart)
  • Geography (http://www.academickids.com/encyclopedia/index.php/Geography)
    • Countries of the World (http://www.academickids.com/encyclopedia/index.php/Countries)
    • Maps (http://www.academickids.com/encyclopedia/index.php/Maps)
    • Flags (http://www.academickids.com/encyclopedia/index.php/Flags)
    • Continents (http://www.academickids.com/encyclopedia/index.php/Continents)
  • History (http://www.academickids.com/encyclopedia/index.php/History)
    • Ancient Civilizations (http://www.academickids.com/encyclopedia/index.php/Ancient_Civilizations)
    • Industrial Revolution (http://www.academickids.com/encyclopedia/index.php/Industrial_Revolution)
    • Middle Ages (http://www.academickids.com/encyclopedia/index.php/Middle_Ages)
    • Prehistory (http://www.academickids.com/encyclopedia/index.php/Prehistory)
    • Renaissance (http://www.academickids.com/encyclopedia/index.php/Renaissance)
    • Timelines (http://www.academickids.com/encyclopedia/index.php/Timelines)
    • United States (http://www.academickids.com/encyclopedia/index.php/United_States)
    • Wars (http://www.academickids.com/encyclopedia/index.php/Wars)
    • World History (http://www.academickids.com/encyclopedia/index.php/History_of_the_world)
  • Human Body (http://www.academickids.com/encyclopedia/index.php/Human_Body)
  • Mathematics (http://www.academickids.com/encyclopedia/index.php/Mathematics)
  • Reference (http://www.academickids.com/encyclopedia/index.php/Reference)
  • Science (http://www.academickids.com/encyclopedia/index.php/Science)
    • Animals (http://www.academickids.com/encyclopedia/index.php/Animals)
    • Aviation (http://www.academickids.com/encyclopedia/index.php/Aviation)
    • Dinosaurs (http://www.academickids.com/encyclopedia/index.php/Dinosaurs)
    • Earth (http://www.academickids.com/encyclopedia/index.php/Earth)
    • Inventions (http://www.academickids.com/encyclopedia/index.php/Inventions)
    • Physical Science (http://www.academickids.com/encyclopedia/index.php/Physical_Science)
    • Plants (http://www.academickids.com/encyclopedia/index.php/Plants)
    • Scientists (http://www.academickids.com/encyclopedia/index.php/Scientists)
  • Social Studies (http://www.academickids.com/encyclopedia/index.php/Social_Studies)
    • Anthropology (http://www.academickids.com/encyclopedia/index.php/Anthropology)
    • Economics (http://www.academickids.com/encyclopedia/index.php/Economics)
    • Government (http://www.academickids.com/encyclopedia/index.php/Government)
    • Religion (http://www.academickids.com/encyclopedia/index.php/Religion)
    • Holidays (http://www.academickids.com/encyclopedia/index.php/Holidays)
  • Space and Astronomy
    • Solar System (http://www.academickids.com/encyclopedia/index.php/Solar_System)
    • Planets (http://www.academickids.com/encyclopedia/index.php/Planets)
  • Sports (http://www.academickids.com/encyclopedia/index.php/Sports)
  • Timelines (http://www.academickids.com/encyclopedia/index.php/Timelines)
  • Weather (http://www.academickids.com/encyclopedia/index.php/Weather)
  • US States (http://www.academickids.com/encyclopedia/index.php/US_States)

Information

  • Home Page (http://academickids.com/encyclopedia/index.php)
  • Contact Us (http://www.academickids.com/encyclopedia/index.php/Contactus)

  • Clip Art (http://classroomclipart.com)
Toolbox
Personal tools