RAP_Suspension Rule Flashcards
WHAT IS THE RAP
What is the common law Rule Against Perpetuities?
RAP = No interest is valid IF it could vest LATER than any life in being (LIB) at the time of the creation of the interest, PLUS 21 yrs
RAP = Invalid if interest can vest after LIB + 21 years from it’s creation
An interest is vested when there is NO CONDITION that has to be satisfied, and the EXACT IDENTITY of the taker (if anybody) is KNOWN
If there is ANY possibility, NO MATTER HOW REMOTE, that an interest could vest LATER than LIB + 21 yrs, it’s VOID
NY PERPETUTIES REFORM STATUTE
How has NY modified the Rule Against Perpetuties?
NY has a PERPETUITIES REFORM STATUTE
NY’s reform statute AUTOMATICALLY reduces all age contingencies to 21 yrs, thus SAVING the gift
N.Y. RULE AGAINST SUSPENSION OF THE POWER OF
ALIENATION:
What is the NY Rule Against Suspension of the Pwrs of Alienation?
Definition of the Rule = Any interest is VOID, if it suspends the pwr of alienation for a pd LONGER than lives in being (LIB) PLUS 21 yrs (i.e. there are NO persons who could, TOGETHER, transfer fee simple title)
This is a concern with…
1) Spendthrift income interests that are in the trusts (REMEMBER: NY has automatic attachment of spendthrift protection);
OR
2) A life estate is created in an unborn person, or in an open class that MAY possibly include unborn persons E.g….
“On Jane’s death, to pay income to Jane’s children for their lives”
Interest to Jane’s children is subject to the suspension rule and is VOID b/c Jane could have potential children that couldn’t sell their interest (b/c of Spendthrift Rule)
