9. Rule Against Perpetuities Flashcards
What is the rule under the Rule Against Perpetuities?
1) Perpetuities period begins to run at creation of interest
- Measuring lives used to show validity of that interest must be in existence at that time
2) Interest ‘will/will NOT’ (NOT ‘may’) vest within lives in being 21 years (and class closes) => Interest becomes;
- Possessory
- Indefeasibly vested remainder
- Vested remainder subject to total divestment
3) UNLESS reform statute is applicable to save gift
When does the perpetuities period begin to run for wills/trusts/deeds?
Testamentary trusts/Wills
- Once Testator dies
Revocable (inter vivos) trust
- Once trust becomes irrevocable (Settlor dies/amends trust)
Irrevocable (inter vivos) trust
- Once trust is created
Deeds
- Once deed is delivered with intent to pass title
What type of interests may be subject to the Rule against Perpetuities?
TPs’ future interests
- Contingent remainders
- Executory interests (so long as => condition stricken => fee simple determinable)
- Executory interests (but if => condition not stricken => Fee simple absolute)
- Vested remainders subject to open
Charity-Private person (vice versa)
- NOT charity-charity (charitable trust presumed to last forever)
Unborn widow
Options
- Option to purchase (conveyance, NOT lease)
- Right of first refusal (some states)
NOT
- Indefeasibly vested remainder
- Vested remainders subject to total divestment/condition subsequent
- Possibility of reverter
- Right of entry
What statutory reforms exist?
‘Wait and see’ approach
- Determine whether interest will ‘actually’ vest/not vest within 21 years
Cy Pres doctrine
- Reform instrument to satisfy perpetuities period
- Charitable trusts/wills (outright bequest to charity)
Uniform Statutory Rule Against Perpetuities (USRAP)
- Perpetuities period is 90 years
When may classes close for purposes of RAP?
Ancestor’s death
- Class can no longer take members
Rule of Convenience - Living member of class survives after termination of preceding estate
When may class gift violate RAP?
All or Nothing rule - If one member violates RAP + others do not violate RAP => Whole class violates RAP