Rule Against Perpetuities Flashcards
What is the RAP?
No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.
What interests are subject to RAP?
ONLY applies to contingent interest → Does NOT apply to a vested interest!
RAP does NOT apply to
1. Present interest already vests
2. Reversionary interest is deemed vested
3. IVR
RAP does apply to
1. Executory interest until it becomes possessory (UNLESS the only contingency is the mere passage of time)
2. Contingent Remainders
3. VRSO
What is the key inquiry of RAP?
Does the contingent interest vest in time?? If there is any possibility that it does not vest within the period of the rule (lives in being + 21 years + gestation) then the interest is void ab initio!
Focus on the family for lives in being!
Common law rules do not apply modern medical technology, so don’t think about IVF or anything of the like!
When must RAP analysis take place?
The analysis must take place as of the effective date, regardless of when the actual issue arises — ONLY analyze as facts exist as of effective date, it is a prospective analysis
What is the measuring life?
Any natural person who was “in being” (includes child in embryo) when the interest was created may be the individual whose remaining lifetime is used to determine the initial period of the rule.
Theoretically could be anyone alive at effective date,but realistically not going to have to look at the entire world → Focus on the family!
RAP analysis steps:
- Identify the type of disposition
- Determine the effective date of Disposition
- As of effective date, using only facts existing on effective date (ignoring facts occurring after effective date) classify & label ALL future interests as contingent or vested
- Identify the period of the Rule (snapshot of the family that is alive)
- Will the interest violate the period of RAP (if ANY possibility an interest doesn’t vest, VOID AB INITIO)
Conditions of survivorship
Do not imply conditions of survivorship for future interests, if the transferor wanted to, they could have done so
RAP and trusts
the effective date of the disposition is when the trust becomes irrevocable!
Irrevocable trust is date of creation and funding
Revocable trust is date of death
Texas RAP and Trusts
Applies to all trusts except for charitable trusts!
Charity to charity exception = if it shifts from one charity to another RAP doesn’t apply
Who must prove it will vest within RAP?
The proponent of the interest must prove that it will vest with absolute certainty!
Fertile Octogenarian Rule:
Regardless of age (or health) someone is, they are always deemed capable of bearing a child.
Precocious Toddler Rule
Regardless of how young (or healthy/unhealthy) someone is, they are always deemed capable of having children.
Exception to general closing rule if no living members of the class:
if at the effective date there are no living members of the class, the class will stay open until it biologically closes because it is presumed that T wanted to include all of the class.
Per capita class gift (a specific amount of money given to each member)
Per capita gift: class opens and closes at effective date no matter what.
Gift of income and RAP
Gift of income: The class opens and closes at the time of each income distribution
