Rule against perpetuities
Encyclopedia
The common law
rule against perpetuities forbids some future interests
(traditionally contingent remainders
and executory interests
) that may not vest
within the time permitted; the rule "limit[s] the testator's power to earmark gifts for remote descendants". In essence, the rule prevents a person from putting qualifications and criteria in his will that will continue to control or affect the distribution of assets long after he or she has died, a concept often referred to as control by the "dead hand" or "mortmain
". “No interest is good unless it must vest, if at all, not later than twenty-one years after the death of some life in being at the creation of the interest.” For the purposes of the rule, a life is "in being" at conception. Although most discussions and analysis relating to the rule revolve around wills and trusts
, the rule applies to any future dispositions of property, including options
. When a part of a grant or will violates the rule, only that portion of the grant or devise
is removed. All other parts that do not violate the rule are still valid. The perpetuities period under the common law rule is not a fixed term of years. By its terms, the rule limits the period to at the latest 21 years after the death of the last identifiable individual living at the time the interest was created ("life in being"). This "measuring" or "validating" life need not have been a purchaser or taker in the conveyance or devise. The measuring life could be the grantor, a life tenant, a tenant for a term of years, or in the case of a contingent remainder or executory devise to a class of unascertained individuals, the person capable of producing members of that class.
The rule against perpetuities at common law has been amended by statutes. In England, the Statute of Uses
(1536) and the Statute of Wills
(1540) and the consequent rise of flexible future interests made the rule a significant judicial tool in defeating the intent of landowners in grants and devises. Major alterations to the common law rule in the United Kingdom
came into effect under the Perpetuities and Accumulations Act 1964
, including the application of traditional 21-year limitation on options.
The rule is notoriously difficult to properly apply, as pointed out by a 1961 decision of Supreme Court of California
which held that it was not legal malpractice
for an attorney to draft a will that inadvertently violated the rule against perpetuities. Therefore, in the United States
it has been abolished by statute in Alaska
, Idaho
, New Jersey
, Pennsylvania
and South Dakota
. The Uniform Statutory Rule Against Perpetuities validates non-vested interests that would otherwise be void under the common law rule if that interest actually vests within 90 years of its creation; it has been enacted in 26 states (Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Indiana, Kansas, Massachusetts, Minnesota, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Tennessee, Utah, Virginia, Washington, West Virginia), the District of Columbia and the U.S. Virgin Islands, and is currently under consideration in New York. Other jurisdictions apply the "wait and see" or "cy-près doctrine" that validate contingent remainders and executory interests void under the traditional rule in certain circumstances. These doctrines have also been codified in the United Kingdom by the 1964 statute.
), who had tried to create a shifting executory limitation so that one of his titles would pass to his eldest son (who was mentally deficient) and then to his second son, and another title would pass to his second son, but then to his fourth son. The estate plan also included provisions for shifting the titles many generations later, if certain conditions should occur.
When his second son, Henry
, succeeded to one title, he did not want to pass the other to his younger brother, Charles. Charles sued to enforce his interest, and the court (in this instance the House of Lords
) held that such a shifting condition could not exist indefinitely. The judges believed that tying up property too long beyond the lives of people living at the time was wrong, although the exact period was not determined until another case, Cadell v. Palmer, 150 years later.
The rule against perpetuities is closely related to another doctrine in the common law of property, the rule against unreasonable restraints on alienation. Both stem from an underlying principle or reference in the common law against restraints on property rights. However, while a violation of the rule against perpetuities is also a violation of the rule against unreasonable restraints on alienation, the reciprocal is not true. As one has stated, "The rule against perpetuities is an ancient, but still vital, rule of property law intended to enhance marketability of property interests by limiting remoteness of vesting." For this reason, another court has declared that the provisions of the rule are predicated upon "public policy" and thus "constitute non-waivable, legal prohibitions.
defines the rule against perpetuities as "[t]he common-law rule prohibiting a grant of an estate unless the interest must vest, if at all, no later than 26 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 26 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 26 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.
The rule does not apply to interests in the grantor himself. For example, the grant "For A so long as alcohol is not sold on the premises, then to B" would violate the rule as to B. However, the conveyance to B would be stricken, leaving "To A so long as alcohol is not sold on the premises." This would create a fee simple
determinable in A, with a possibility of reverter in the grantor (or the grantor's heirs). The grant to B would be void as it is possible alcohol would be sold on the premises more than 26 years after the deaths of A, B, and the grantor. However, as the rule does not apply to grantors, the possibility of reverter in the grantor (or his heirs) would be valid.
A common example of the rule in application would be as follows. T writes a will. T already has great-grandchildren, has met them, and likes them. T also has Blackacre. It is T's desire to leave Blackacre for her family to enjoy, and wants to ensure that her great-grandchildren, whom she knows, get to enjoy Blackacre as well without her great-grandchildren's older ancestors, such as T's children and grandchildren, selling Blackacre. After her great-grandchildren, T really has no interest in who enjoys Blackacre, as she does not know them.
T goes to her lawyer and explains her desire. T's lawyer drafts a will with the following clause:
What the lawyer has created is a life estate in Blackacre to T's children, a successive life estate in Blackacre to T's grandchildren followed by a Fee Simple future interest in T's great-grandchildren. However, the Rule Against Perpetuities would void the interest to T's great-grandchildren, and leave the will creating the successive life estates with a reversionary interest in T's estate.
Why? The rules states that any interest must vest, if at all, within 21 years of a life in being at the time of the instrument. The instrument here is a will, so the time of the instrument is T's death, not when the will was drafted. Next, we need to find every possible person, whether named in the instrument or not, who could, regardless how remote the possibility, affect the instrument. T's children, grandchildren etc. are our possible measuring lives because they control who will take Blackacre. For a measuring life to be valid, it must be a life in being at the time of the interest. For a class, such as children, grandchildren, to be valid measuring lives, it must be a closed class, meaning it would be impossible for another class member to come into existence after the time of the instrument.
In the above example, T's children are a valid measuring life. T's children are a class, so the class must be closed at the time of the instrument for T’s children to be valid measuring lives. Here, the class that is T's children would be closed at the time of the instrument as it is impossible for T to have any children after T dies. So any interest which must vest within 21 years after T's children die is valid. The class that is T's grandchildren is NOT a valid measuring life as T's children are free to reproduce after T dies, meaning the class is not closed at the time of the instrument. Obviously, the same goes for T's great-grandchildren for the same reason.
Now that we know our valid measuring lives, we can see which interests in Blackacre are valid. Obviously, the life estate to T's children is valid as they are the measuring lives. The life estate to T's grandchildren is also valid. Why? Because all of T's grandchildren must be born within 21 years of a measuring life. T's children are our measuring lives, all of T's grandchildren must be born before the last of T's children dies (or, at least be in the womb, which counts as being alive for RAP purposes), meaning their interest would vest within 21 years of a measuring life. T's great-grandchildren's interest is invalidated by the Rule. Why? Because T's grandchildren are free to reproduce after all of T's children have died. It is possible that one of T's grandchildren could have a child more than 21 years after T's last child died, meaning the interest might not vest within 21 years of a life in being.
died, leaving a will that specified that apart from small allowances, his
estate was not to be distributed until 21 years after the death of the last of his grandchildren to be born in his lifetime. This condition was met in 2010, 21 years after his granddaughter Marion Landsill died in November 1989. After the heirs reached an agreement, the estate, which had reached an estimated value of $100 million to $110 million, was finally distributed in May, 2011, 92 years after his death.
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 under 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. However, if the original conveyance was "to John Smith and his heirs for as long as John Smith does not use the premises to sell liquor, but if he does, then to the Red Cross" the rule would not be violated, because it would necessarily vest or expire within the life of John Smith (since the restriction was on him alone).
(the father of John F. Kennedy
), or John D. Rockefeller
. Both designate well-known families with many descendants, and are consequently suitable for named, identifiable lives in being.
The class of people must be limited and determinable. Thus, one cannot say in a deed "until the last of the people in the world now living dies, plus 21 years." For a time, it was popular to use a Royal lives clause
, and make the term of a deed run until the last of the descendants of (for example) Queen Victoria now living dies plus 21 years. This was grudgingly upheld by the courts.
periods. For example, if a corporation builds a ski slope, and gives rights of use (usufruct) as gifts to corporate partners, these cannot last in perpetuity, but must terminate after a period that must be specified, e.g. 10 years. A perpetual usufruct
is thus forbidden and "perpetual" might mean a long, but finite period, such as 99 years. Here usufruct is distinct from a share
, which may be held in perpetuity.
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
rule against perpetuities forbids some future interests
Future interests
Future interests is the subset of actuarial math that divides enjoyment of property -- usually the right to an income stream either from an annuity, a trust, royalties, or rents -- based usually on the future survival of one or more persons ....
(traditionally contingent remainders
Remainder (law)
A remainder in property law is a future interest given to a person that is capable of becoming possessory upon the natural end of a prior estate created by the same instrument...
and executory interests
Executory interests
In property law and real estate, a future interest is a legal right to property ownership that does not include the right to present possession or enjoyment of the property. Future interests are created on the formation of a defeasible estate; that is, an estate with a condition or event...
) that may not vest
Vesting
In law, vesting is to give an immediately secured right of present or future enjoyment. One has a vested right to an asset that cannot be taken away by any third party, even though one may not yet possess the asset. When the right, interest or title to the present or future possession of a legal...
within the time permitted; the rule "limit[s] the testator's power to earmark gifts for remote descendants". In essence, the rule prevents a person from putting qualifications and criteria in his will that will continue to control or affect the distribution of assets long after he or she has died, a concept often referred to as control by the "dead hand" or "mortmain
Mortmain
Mortmain is a legal term that means ownership of real estate by a corporation or legal institution that can be transferred or sold in perpetuity; the term is usually used in the context of its prohibition...
". “No interest is good unless it must vest, if at all, not later than twenty-one years after the death of some life in being at the creation of the interest.” For the purposes of the rule, a life is "in being" at conception. Although most discussions and analysis relating to the rule revolve around wills and trusts
Trust law
In common law legal systems, a trust is a relationship whereby property is held by one party for the benefit of another...
, the rule applies to any future dispositions of property, including options
Option (law)
In law, an option is the right to convey a piece of property. The person granting the option is called the optionor and the person who has the benefit of the option is called the optionee .Options characteristically exist in one of two forms:* Call options, which give the beneficiary the right to...
. When a part of a grant or will violates the rule, only that portion of the grant or devise
Devise
Devise may refer to:* To invent something* A disposition of real property in a will* Devise A Free and Open Software project providing application user authentication through Warden* Devise, Somme...
is removed. All other parts that do not violate the rule are still valid. The perpetuities period under the common law rule is not a fixed term of years. By its terms, the rule limits the period to at the latest 21 years after the death of the last identifiable individual living at the time the interest was created ("life in being"). This "measuring" or "validating" life need not have been a purchaser or taker in the conveyance or devise. The measuring life could be the grantor, a life tenant, a tenant for a term of years, or in the case of a contingent remainder or executory devise to a class of unascertained individuals, the person capable of producing members of that class.
The rule against perpetuities at common law has been amended by statutes. In England, the Statute of Uses
Statute of Uses
The Statute of Uses was an Act of the Parliament of England that restricted the application of uses in English property law. The Statute was originally conceived by Henry VIII of England as a way to rectify his financial problems by simplifying the law of uses, which moved land outside the royal...
(1536) and the Statute of Wills
Statute of Wills
The Statute of Wills was an Act of the Parliament of England. It made it possible, for the first time in English history, for landholders to determine who would inherit their land upon their death by permitting bequest by will...
(1540) and the consequent rise of flexible future interests made the rule a significant judicial tool in defeating the intent of landowners in grants and devises. Major alterations to the common law rule in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
came into effect under the Perpetuities and Accumulations Act 1964
Perpetuities and Accumulations Act 1964
The Perpetuities and Accumulations Act 1964 is an Act of the Parliament of the United Kingdom. In English land law it reformed the rule against perpetuities....
, including the application of traditional 21-year limitation on options.
The rule is notoriously difficult to properly apply, as pointed out by a 1961 decision of Supreme Court of California
Supreme Court of California
The Supreme Court of California is the highest state court in California. It is headquartered in San Francisco and regularly holds sessions in Los Angeles and Sacramento. Its decisions are binding on all other California state courts.-Composition:...
which held that it was not legal malpractice
Legal malpractice
Legal malpractice is the term for negligence, breach of fiduciary duty, or breach of contract by an attorney that causes harm to his or her client...
for an attorney to draft a will that inadvertently violated the rule against perpetuities. Therefore, in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
it has been abolished by statute in Alaska
Alaska
Alaska is the largest state in the United States by area. It is situated in the northwest extremity of the North American continent, with Canada to the east, the Arctic Ocean to the north, and the Pacific Ocean to the west and south, with Russia further west across the Bering Strait...
, Idaho
Idaho
Idaho is a state in the Rocky Mountain area of the United States. The state's largest city and capital is Boise. Residents are called "Idahoans". Idaho was admitted to the Union on July 3, 1890, as the 43rd state....
, New Jersey
New Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
, Pennsylvania
Pennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
and South Dakota
South Dakota
South Dakota is a state located in the Midwestern region of the United States. It is named after the Lakota and Dakota Sioux American Indian tribes. Once a part of Dakota Territory, South Dakota became a state on November 2, 1889. The state has an area of and an estimated population of just over...
. The Uniform Statutory Rule Against Perpetuities validates non-vested interests that would otherwise be void under the common law rule if that interest actually vests within 90 years of its creation; it has been enacted in 26 states (Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Indiana, Kansas, Massachusetts, Minnesota, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Tennessee, Utah, Virginia, Washington, West Virginia), the District of Columbia and the U.S. Virgin Islands, and is currently under consideration in New York. Other jurisdictions apply the "wait and see" or "cy-près doctrine" that validate contingent remainders and executory interests void under the traditional rule in certain circumstances. These doctrines have also been codified in the United Kingdom by the 1964 statute.
Historical background
The rule has its origin in the Duke of Norfolk's Case of 1682. That case concerned Henry, 22nd Earl of Arundel (later the Duke of NorfolkDuke of Norfolk
The Duke of Norfolk is the premier duke in the peerage of England, and also, as Earl of Arundel, the premier earl. The Duke of Norfolk is, moreover, the Earl Marshal and hereditary Marshal of England. The seat of the Duke of Norfolk is Arundel Castle in Sussex, although the title refers to the...
), who had tried to create a shifting executory limitation so that one of his titles would pass to his eldest son (who was mentally deficient) and then to his second son, and another title would pass to his second son, but then to his fourth son. The estate plan also included provisions for shifting the titles many generations later, if certain conditions should occur.
When his second son, Henry
Henry Howard, 6th Duke of Norfolk
Henry Howard, 6th Duke of Norfolk was the second son of Henry Howard, 22nd Earl of Arundel and Lady Elizabeth Stuart. He succeeded his brother Thomas Howard, 5th Duke of Norfolk after his death in 1677...
, succeeded to one title, he did not want to pass the other to his younger brother, Charles. Charles sued to enforce his interest, and the court (in this instance the House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
) held that such a shifting condition could not exist indefinitely. The judges believed that tying up property too long beyond the lives of people living at the time was wrong, although the exact period was not determined until another case, Cadell v. Palmer, 150 years later.
The rule against perpetuities is closely related to another doctrine in the common law of property, the rule against unreasonable restraints on alienation. Both stem from an underlying principle or reference in the common law against restraints on property rights. However, while a violation of the rule against perpetuities is also a violation of the rule against unreasonable restraints on alienation, the reciprocal is not true. As one has stated, "The rule against perpetuities is an ancient, but still vital, rule of property law intended to enhance marketability of property interests by limiting remoteness of vesting." For this reason, another court has declared that the provisions of the rule are predicated upon "public policy" and thus "constitute non-waivable, legal prohibitions.
Common law
Black's Law DictionaryBlack's Law Dictionary
Black's Law Dictionary is the most widely used law dictionary in the United States. It was founded by Henry Campbell Black. It is the reference of choice for definitions in legal briefs and court opinions and has been cited as a secondary legal authority in many U.S...
defines the rule against perpetuities as "[t]he common-law rule prohibiting a grant of an estate unless the interest must vest, if at all, no later than 26 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
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
, the length of time was fixed at 26 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 26 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.
The rule does not apply to interests in the grantor himself. For example, the grant "For A so long as alcohol is not sold on the premises, then to B" would violate the rule as to B. However, the conveyance to B would be stricken, leaving "To A so long as alcohol is not sold on the premises." This would create a fee simple
Fee simple
In English law, a fee simple is an estate in land, a form of freehold ownership. It is the most common way that real estate is owned in common law countries, and is ordinarily the most complete ownership interest that can be had in real property short of allodial title, which is often reserved...
determinable in A, with a possibility of reverter in the grantor (or the grantor's heirs). The grant to B would be void as it is possible alcohol would be sold on the premises more than 26 years after the deaths of A, B, and the grantor. However, as the rule does not apply to grantors, the possibility of reverter in the grantor (or his heirs) would be valid.
Statutory modification
Many jurisdictions have statutes that either cancel out the rule entirely or change it to make clearer as to the period of time and persons who are affected by it.- In the United KingdomUnited KingdomThe United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, dispositions of property subject to the rule before 14 July 1964 remain subject to the rule. The Perpetuities and Accumulations Act 1964Perpetuities and Accumulations Act 1964The Perpetuities and Accumulations Act 1964 is an Act of the Parliament of the United Kingdom. In English land law it reformed the rule against perpetuities....
provides for the effect of the rule of interests created thereafter. This act codifies the "wait and see" doctrine developed by courts.
- In the Republic of IrelandRepublic of IrelandIreland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...
, the rule is abolished as of 1 December 2009.
- The states of the United StatesUnited StatesThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
have differing approaches.- Some states follow the "wait-and-see approach," or "second look doctrine," and/or apply the "cy pres doctrine". Under the wait and see approach, the validity of a suspect future interest is determined on the basis of facts as they now exist at the end of the measuring life, and not at the time the interest was created. Under the cy pres doctrine, if the interest does violate the rule against perpetuities, the court may reform the grant in a way that does not violate the rule, and will reduce any offensive age contingency to 21 years.
- Other states have adopted the Uniform Statutory Rule Against Perpetuities (or some variant of it) which extends the waiting period typically to 90 years after creation of the interest.
- Many states have repealed the rule in its entirety, or extended the vesting period of the wait and see approach for an extremely long period of time (in FloridaFloridaFlorida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
, for example, up to 360 years for trusts). The motive behind these reforms seems at least in part the desire to take advantage of a loophole in the 1986 Tax Act which has led to the formation of dynasty trustDynasty trustA dynasty trust is a trust designed to avoid or minimize estate taxes being applied to great family wealth with each transfer to subsequent generations...
s. The 1986 Act allows the inheritance transfer tax to be avoided if a trust is set up that is valued over a floor minimum (US$2.5 million in 2005) for each transfer which would be allowed by the Rule Against Perpetuities. The result is that states with no Rule Against Perpetuities, or an extremely long perpetuities period, will attract more large trusts as there would never be a transfer tax on the trust.
Illustrations
Several famous illustrations of the bizarre outcomes possible under the rule against perpetuities include the "fertile octogenarian", the "unborn widow", and the "precocious toddler".A common example of the rule in application would be as follows. T writes a will. T already has great-grandchildren, has met them, and likes them. T also has Blackacre. It is T's desire to leave Blackacre for her family to enjoy, and wants to ensure that her great-grandchildren, whom she knows, get to enjoy Blackacre as well without her great-grandchildren's older ancestors, such as T's children and grandchildren, selling Blackacre. After her great-grandchildren, T really has no interest in who enjoys Blackacre, as she does not know them.
T goes to her lawyer and explains her desire. T's lawyer drafts a will with the following clause:
What the lawyer has created is a life estate in Blackacre to T's children, a successive life estate in Blackacre to T's grandchildren followed by a Fee Simple future interest in T's great-grandchildren. However, the Rule Against Perpetuities would void the interest to T's great-grandchildren, and leave the will creating the successive life estates with a reversionary interest in T's estate.
Why? The rules states that any interest must vest, if at all, within 21 years of a life in being at the time of the instrument. The instrument here is a will, so the time of the instrument is T's death, not when the will was drafted. Next, we need to find every possible person, whether named in the instrument or not, who could, regardless how remote the possibility, affect the instrument. T's children, grandchildren etc. are our possible measuring lives because they control who will take Blackacre. For a measuring life to be valid, it must be a life in being at the time of the interest. For a class, such as children, grandchildren, to be valid measuring lives, it must be a closed class, meaning it would be impossible for another class member to come into existence after the time of the instrument.
In the above example, T's children are a valid measuring life. T's children are a class, so the class must be closed at the time of the instrument for T’s children to be valid measuring lives. Here, the class that is T's children would be closed at the time of the instrument as it is impossible for T to have any children after T dies. So any interest which must vest within 21 years after T's children die is valid. The class that is T's grandchildren is NOT a valid measuring life as T's children are free to reproduce after T dies, meaning the class is not closed at the time of the instrument. Obviously, the same goes for T's great-grandchildren for the same reason.
Now that we know our valid measuring lives, we can see which interests in Blackacre are valid. Obviously, the life estate to T's children is valid as they are the measuring lives. The life estate to T's grandchildren is also valid. Why? Because all of T's grandchildren must be born within 21 years of a measuring life. T's children are our measuring lives, all of T's grandchildren must be born before the last of T's children dies (or, at least be in the womb, which counts as being alive for RAP purposes), meaning their interest would vest within 21 years of a measuring life. T's great-grandchildren's interest is invalidated by the Rule. Why? Because T's grandchildren are free to reproduce after all of T's children have died. It is possible that one of T's grandchildren could have a child more than 21 years after T's last child died, meaning the interest might not vest within 21 years of a life in being.
Applications
In 1919, Wellington R. BurtWellington R. Burt
Wellington R. Burt was a wealthy industrial baron from Saginaw, Michigan. At the time of his death, his wealth was estimated to be between $40 and $90 million. For a time in the early 1900s, Burt ranked as one of the eight wealthiest men in America...
died, leaving a will that specified that apart from small allowances, his
estate was not to be distributed until 21 years after the death of the last of his grandchildren to be born in his lifetime. This condition was met in 2010, 21 years after his granddaughter Marion Landsill died in November 1989. After the heirs reached an agreement, the estate, which had reached an estimated value of $100 million to $110 million, was finally distributed in May, 2011, 92 years after his death.
Charity-to-charity exception
The Rule never applies to conditions placed on a conveyanceConveyancing
In law, conveyancing is the transfer of legal title of property from one person to another, or the granting of an encumbrance such as a mortgage or a lien....
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 under 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. However, if the original conveyance was "to John Smith and his heirs for as long as John Smith does not use the premises to sell liquor, but if he does, then to the Red Cross" the rule would not be violated, because it would necessarily vest or expire within the life of John Smith (since the restriction was on him alone).
Saving clause
To avoid problems caused by incorrectly drafted legal instruments, practitioners in some jurisdictions include a "saving clause" almost universally as a form of disclaimer. This standard clause is commonly called the "Kennedy clause" or the "Rockefeller clause" because the determinable "lives in being" are designated as the descendants of Joseph P. KennedyJoseph P. Kennedy, Sr.
Joseph Patrick "Joe" Kennedy, Sr. was a prominent American businessman, investor, and government official....
(the father of John F. Kennedy
John F. Kennedy
John Fitzgerald "Jack" Kennedy , often referred to by his initials JFK, was the 35th President of the United States, serving from 1961 until his assassination in 1963....
), or John D. Rockefeller
John D. Rockefeller
John Davison Rockefeller was an American oil industrialist, investor, and philanthropist. He was the founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust. Rockefeller revolutionized the petroleum industry and defined the structure of...
. Both designate well-known families with many descendants, and are consequently suitable for named, identifiable lives in being.
The class of people must be limited and determinable. Thus, one cannot say in a deed "until the last of the people in the world now living dies, plus 21 years." For a time, it was popular to use a Royal lives clause
Royal lives clause
A Royal lives clause is a contract clause which provides that a certain right must be exercised within the lifetime plus 21 years of the last living descendant of a British Monarch who happens to be alive at the time when the contract is made....
, and make the term of a deed run until the last of the descendants of (for example) Queen Victoria now living dies plus 21 years. This was grudgingly upheld by the courts.
Related rules
Jurisdictions may limit usufructUsufruct
Usufruct is the legal right to use and derive profit or benefit from property that either belongs to another person or which is under common ownership, as long as the property is not damaged or destroyed...
periods. For example, if a corporation builds a ski slope, and gives rights of use (usufruct) as gifts to corporate partners, these cannot last in perpetuity, but must terminate after a period that must be specified, e.g. 10 years. A perpetual usufruct
Perpetual usufruct
Perpetual usufruct is the English-language term often used by Polish lawyers to describe the Polish version of public ground lease. It is usually granted for 99 years, but never shorter than 40 years, and enables leasehold use of publicly-owned land, in most cases located in urban areas...
is thus forbidden and "perpetual" might mean a long, but finite period, such as 99 years. Here usufruct is distinct from a share
Share (finance)
A joint stock company divides its capital into units of equal denomination. Each unit is called a share. These units are offered for sale to raise capital. This is termed as issuing shares. A person who buys share/shares of the company is called a shareholder, and by acquiring share or shares in...
, which may be held in perpetuity.
See also
- Cestui que
- Cy-près doctrine
- Executory contractExecutory contractAn executory contract is a contract which has not yet been performed or executed. Although material, an obligation to pay money does not usually make a contract executory. An obligation is material if a breach of contract would result from the failure to satisfy the obligation...
- Executory interest
- Statutes of MortmainStatutes of MortmainThe Statutes of Mortmain were two enactments, in 1279 and 1290, by King Edward I of England aimed at preserving the kingdom's revenues by preventing land from passing into the possession of the Church. In Medieval England, feudal estates generated taxes upon the inheritance or granting of the estate...
- Thellusson Will CaseThellusson Will CaseThe Thellusson Will Case is an English trusts law case. It was a law suit resulting from the will of Peter Thellusson, an English merchant ....