Rule Against Perpetuities/RAP + Wills Estates Trusts Flashcards
Adapted from Wonnell Document
Fee Simple Absolute
“To A and his heirs” or just “To A”.
Note: A’s heirs have no rights to interfere with A’s control of the property. A can sell it, give it away, bequeath it in a will, or pledge it as collateral for a loan.
The heirs take only if A dies intestate, not having done anything with the property.
Fee Simple Determinable
“To A as long as the land is used for park purposes”.
Note that the wording makes the condition an integral part of what was given.
The grantor has a possibility of reverter, which automatically revests the land in the grantor if the land is used for other purposes.
Fee Simple on Condition Subsequent
“To A, but if the land is not used for park purposes, O can retake.”
Note that the wording at first seems to give a fee simple interest to A but then threatens to divest A of that interest if something specific happens.
O has a right of entry, that must be exercised by him or her to be effective.
Fee Simple Subject to an Executory Limitation
“To A, but if the land is not used for park purposes, to B.”
The wording again seems to give A a fee interest but then threaten to cut it short, this time in favor of another transferee.
B has a shifting executory interest, which becomes effective automatically if the land is used for a different purpose
(i.e., B does not have to do anything to become the owner).
Life Estate
“To A for life”. A has the land for his life, and O has a reversion.
“To A for Life, then to B for Life.” A has the land for his life. B has a vested remainder for life (vested because B is an identified person and there is no condition precedent to his taking the land other than the natural termination of the preceding estate). O has a reversion.
“To A for Life, then to B.” A has a life estate. B has a vested remainder in fee simple absolute. There is no reversion in O.
Estate for Years
“To A for 20 years, then to B”. B has a vested remainder in fee simple. O has no reversion.
“To A for 20 months”. O has a reversion after A’s estate for years.
Fee Tail
Definition: Ownership passed to lineal descendants.
“To A and the heirs of his body”.
In feudal England, this estate gave the property to A for his life, then to his lineal descendants (traditionally his oldest son) until the line ran out.
This arrangement was disfavored during the Industrial Revolution as tying up land in families and keeping land from reaching its highest and best use by alienation.
Today, there is no such interest in California and most other states. “To A and the heirs of his (or her) body” is interpreted to “To a and his (or her) heirs”, i.e., a fee simple absolute.
Vested Remainder
Definition: Ownership to a known party with no conditions.
Example: “To A for life, then to B.”
B has a vested remainder in fee simple. Identified person, no conditions to taking other than natural termination of preceding estate, so it’s vested.
As a result, the Rule Against Perpetuities has no applicability to B’s interest. Even if B dies, B’s estate takes the vested remainder.
Vested Remainder Subject to Open
Definition: Ownership to a known party with potential additions.
Example: “To A for life, then to A’s grandchildren.”
“To A for life, then to A’s grandchildren.” A has one grandchild, X, when O deeded the land. X has a vested remainder subject to open. However, for Rule Against Perpetuities purposes, the interest is treated as contingent until all class members are known, so there could be a problem under the Rule.
Contingent Remainders and Alternative Contingent Remainders
Definition: Ownership contingent upon specific conditions.
Example: “To A for life, then to B if B attains age 30, or to C if B does not attain age 30.”
This starts out as a contingent remainder, but it becomes vested if B attains age 30. Then C (and O) would have nothing.
Springing Executory Interest
Definition: Transfer of ownership based on specific conditions.
Example: “To A if he passes the bar.”
O retains his or her fee simple in the land, subject to an executory limitation in favor of A. A has a springing executory interest, springing because it comes directly from O and not from another transferee (where it would be a shifting interest).
Note: Springing and shifting executory interests were once not recognized as legal interests, but only by equity courts, until Henry VIII decided he needed more tax money.
Reforms of Future Interests
The Restatement eliminates many distinctions among interests. For example, the fee simple determinable and the fee simple on condition subsequent are grouped together as “fee simple determinable”, while remainders and executory interests are grouped together as “future interests”. And California has abolished the fee simple determinable, so that an attempt to create one creates a fee simple on condition subsequent instead.
What is the Rule Against Perpetuities (tRAP)
“No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest.”
You need to ask two questions.
First, why is the interest not already vested? (It will be because the persons are unidentified, because there is some condition precedent to their taking other than the natural termination of the prior estate, or both).
Second, is there some person or group of persons (the VALIDATING LIFE OR LIVES) where one can say with certainty that the interest which is now contingent will become vested less than 21 years after that person’s death.
Example: “In trust to A for life, then to A’s first child to reach 21.”
These interests are valid under the Rule Against Perpetutities (RAP). A’s life estate is already vested. The interest of A’s first child is currently contingent because we don’t know who will be the first of A’s children to reach 21. But it will vest within 21 years of A’s death, because after A dies he can’t have any more children and we will know within 21 years which child reached 21 first. It is possible that none will reach 21, but that is not a problem under the RAP; it just creates a reversion in O.
Example: “In trust to A for life, then to A’s first child to reach 25.”
The interest of the first child is void under the RAP. A’s first child to reach 25 might reach 25 more than 21 years after A died. Even if A had a child aged 15 named X, X could not be his own validating life because the first child of A to reach age 25 might be an after-born child of A.
