Rule Against Perpetuities Flashcards
Rule Against Perpetuities
RAP provides that certain kinds of future interests are void if there is any possibility, however, remote, that the interest might vest more than 21 years after a person alive at the time of the grant has died.
When does RAP apply?
Applies only to:
contingent remainders,
executory interests,
vested remainders subject to open,
options to purchase, and
rights of first refusal
The grantor’s interests (reversions, possibility of reverter, rights of entry) are safe from RAP; you don’t need to consider them.
When does RAP run?
The time the interest is created and the perpetuities period begins to run depends on the instrument and the interest created.
For interests granted by will, it runs from the date of the testator’s death;
For deeds, it is the date of delivery
Irrevocable Trust - from the date it is created
Revocable Trust - date it becomes irrevocable
When does an interest vest for RAP purposes?
An interest vests for purpose of RAP when it becomes:
- possessory, or
- an indefeasibly vested remainder or a vested remainder subject to total divestment
What are the measuring lives for RAP?
Unless other measuring lives are specified, one connected with the vesting of the interest is used.
You are looking for a person alive at the date of the conveyance whose life and/or death is relevant to the prescribed condition’s occurrence.
Interests exempt from RAP
Except for VR subject to open, RAP does not apply to vested interests.
Rule does not apply to any disposition from charity to charity.
Consequences of Violating RAP
violation of RAP destroys only the offending interest.
Four Step Exam Analysis
- Determine the future interest
- applies only to contingent remainders, executory interests, and certain vested remainders subject to open
- What has to happen for future interest holder to take
- does the holder of a previous estate need to die? Does a previous holder need to have had children? etc.
- Find measuring life
- look for the people alive at the date of the conveyance whose lives and/or deaths are relevant to what has to happen for the future interest holder to take.
- When will we know if future interest holder can take
- determine whether we’ll know for sure within 21 years of the death of a measuring life if the future interest holder can take. If so, the conveyance is good.
Bright Line Rule - Executory Interest
Executory Interest with no time limit violates the rule
I.e., To A for so long as no liquor is consumed on the premises, then to B
Age Contingency Beyond Age 21 in Open Class
A gift to an open class conditioned on members surviving beyond age 21 violates the rule
Application of the Rule to Class Gifts:
Gift to Subclass Exception
Each gift to a subclass may be treated as a separate gift under the Rule.
Per Capita Gift Exception
A gift of a fixed amount to each member of a class is not treated as a class gift under the Rule
Reform of RAP
- Wait and See - validity determined per facts as they come to be
- Uniform Statutory RAP - provides alternative 90 year vesting period
- Cy Pres Doctrine (“As Near As Possible) - Court can redraft “as near as possible” to grantor’s intent
