Rule Against Perpetuities

Question 1

What is the RAP?

Answer 1

“No interest [subject to the RAP] is good… unless it must vest [or fail][in a closed class] no later than 21 years after some life in being at the creation of the interest.”

Question 2

What does the RAP apply to?

Answer 2

1. Contingent Remainders
2. Executory interests
3. vested remainders in an open class
4. option and similar contracts

Question 3

When does a vested remainder in an open class vest for RAP?

Answer 3

1. It closes {either because no new members can join or because 1 member is entitled to possession
   AND
2. All class members meet the condition

Question 4

Five Step RAP Analysis

Answer 4

1. Classify the Interests
2. Identify the condition precedent to the vesting of the suspect future interest
3. Identify the measuring life
4. Test if the future interest will vest or fail within 21 years of that measuring life
5. Reclassify the remaining valid interests

Question 5

How to determine the measuring life?

Answer 5

A potential life in being is someone who was alive at the time the interest was created and that has a reasonable connection to the interest

Question 6

How to determine the RAP period

Answer 6

Perpetuities period begins at the creation of the interest

Question 7

What is the other option

Answer 7

“Wait-and-See” approach of seeing if the remainder will violate the RAP after 90 years of the grantor’s death