Rule Against Perpetuities Flashcards
1
Q
Rule Against Perpetuities - Overview
A
- 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
2
Q
RAP - Application
A
- applies ONLY to contingent remainders, executory interests, vested remainders subject to open, options to purchase, and rights of first refusal
- ALL grantor interests are safe from this rule
3
Q
When Perpetuities Period Begins to Run
A
- depends on the instrument + the interest created
- for interests granted by will, the period runs from the date of the testator’s death
- for deeds, the period is the date of delivery
- runs on an irrevocable trust from the date it is created, = a revocable trust from the date it becomes irrevocable
4
Q
RAP - Vesting
A
- an interest vests for RAP purposes when it becomes 1) possessory or 2) an indefeasibly vested remainder or a vested remainder subject to total divestment
- book notes that key is when the interests could possibly vest (not when it did or is likely to)
-> need to examine grant at T of creation + be sure that the interest will vest within the period of the rule (life in being plus 21 yrs)
-> if there’s any possibility it could vest beyond that period, it’s void
5
Q
Lives in Being
A
- unless other measuring lives are specified, one connected with the vesting of the interest is used
- look for someone alive at the date of the conveyance whose life and/or death is relevant to the prescribed condition’s occurrence
6
Q
Interests Exempt from Rule
A
- except for vested remainders subject to open, RAP doesn’t apply to vested interests
-> other vested remainders, reversions, possibilities of reverter, + rights of entry are not subject to the rule - charity-to-charity exception to the Rule (doesn’t apply to any disposition from one charity to another
- also an exception for options to purchase held by a current tenant
7
Q
Consequences of Violating RAP
A
- offensive interest stricken
- violation destroys only the offending interest though
8
Q
Four Steps for Assessing RAP Problems
A
1- determine the interests created by the conveyance + whether the rule could apply to them
2- how does the future interest holder take?
3- find the measuring life
4- when will we know if the future interest holder can take?
9
Q
RAP - Common Pitfall Cases
A
- bright line rule - executory interest with no time limit violates the rule
-> ex: to A and his heirs so long as the land is used for farm purposes, and if the land ceases to be so used, to B and his heirs - gift to an open class conditioned on members surviving beyond age 21 automatically violates RAP (because the lives of the unborn people would necessarily go 21 years beyond current measuring lives)
-gifts conditioned on administrative contingencies (ex: admission of will to probate) violate the rule (ex: “to my issue surviving at the distribution of my estate”)
10
Q
RAP - Bad as to One, Bad as to All Rule
A
- if the interest of any class member may vest too remotely, the whole class gift fails
- for the class gift to vest, the class must be closed and all conditions precedent satisfied for every member
11
Q
RAP - Fertile Octogenarian
A
- women are conclusively presumed for RAP purposes to be capable of bearing children, regardless of age or medical condition (although a few states have enacted reforms)
12
Q
RAP - Unborn Widow or Widower
A
- b/c a person’s widow/widower isn’t determined until their death, it may turn out to be someone who was not in being at the time of the disposition
- ex: “to A for A’s life, then to A’s widow for life, then to A’s surviving issue in fee” -> the grant to A’s surviving issue would be invalid b/c the widow may not be alive at the time of the grant, but the grant to the actual widow would be valid b/c A would serve as the measuring life for that part of the grant
13
Q
Options and Rights of First Refusal - Background
A
- option = contract, supported by consideration, that creates in the optionee a right to purchase the property on terms provided in the option
- under a right of first refusal, if a seller receives a third party’s offer to purchase the property, the right of first refusal gives its holder the right to purchase the property, usually on the same terms as the offer
14
Q
Options and Rights of First Refusal - RAP
A
- those that aren’t personal to the holder (i.e. those extended to holder’s heirs and assigns) violate RAP because they might be exercised later than the end of the perpetuities period
-> doesn’t apply though to options to purchase by current lessee - modern trend: valid if doesn’t impose unreasonable restraint on alienation
15
Q
RAP - Class Gifts
A
- each gift to a subclass may be treated as a separate gift under RAP
-> ex: Income to A for life, then to A’s children for their lives. Upon the death of each of A’s children, the corpus is to be distributed to that child’s issue. -> gifts to each of A’s children’s issues are considered separately (so gifts to issues of A’s children living at the time of the disposition are fine, but gifts to the issue of A’s children born after the disposition wouldn’t be fine)
