Rule Against Perpetuities Lawyers
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What Is the Rule Against Perpetuities?
The Rule of Perpetuities is a rule involving estate planning that prohibits use of a contingent grant or will if it fails to vest within a certain period of time. In other words, if a person gives their property to another that depends on some future event or occurrence, that event MUST happen within a specified time limit.
For example, suppose A grants (i.e. gives) B and his heirs (anyone who assumes B's property after he dies) a drug store,"so long as liquor is sold on the premises, otherwise the drug store is returned to A and his heirs."
A?s grant depends on the drug store selling alcohol. However, there is no guarantee that the drug store will always be used to sell alcohol. Also, because A made the promise to B's descendants, it's possible that 100 years from now, one of B's great grandchildren may even choose to ban alcohol sales all together. Consequently, because the condition on A's grant could potentially exist forever, it violates the rule against perpetuities and is therefore an invalid grant.
Why Does the Rule Against Perpetuities Exist?
Courts like concrete and stable ownership in property. In the example above, A' s grant will always cloud ownership of the drug store, since A can possibility regain the property at anytime (once liquor is no longer sold at the drug store). The rule against perpetuities is a way for courts to prevent these types of uncertainties, by imposing a time limit on when grants like A's must no longer be dependant.
What Is the Time Limit for the Rule Against Perpetuities?
The time limit under the rule against perpetuities requires that a grant lose its dependency no more than 21 years after a life in being. "Life in being"in this case means everyone who was alive at the time that the grant was made. Once everyone alive at the time of the grant has died, the 21 year countdown begins. If after 21 years, the grant still remains dependent on a future event or occurrence, it violates the rule against perpetuities and is not valid.
It is important to emphasize that the rule against perpetuities applies to a grant's POSSIBILITY of losing its dependency after 21 years. In other words, one doesn't literally wait 21 years after a life in being to see if the contingency still exists (that person would already be dead!). Rather, one looks at the grant itself to see if it's possible for a grant?s dependency to last beyond that time.
For example, suppose X gives Y and Y's descendants a theme park, "as long as the land has cherry blossoms." Now imagine that 200 years from now Y's great great grandchild, Z, covers the theme park with toxins killing all the cherry blossoms on it. Although this scenario seems a little far fetched, it is still possible. Therefore, this possibility effectively voids X's grant to Y.
How Can a Lawyer Help Me?
If you are making any type of grant or will that involves future events or living persons (i.e. unborn grandchildren, widows, etc.), you should consult an experienced estate planning lawyer. The rule against perpetuities requires the use of very particular language when writing grants or wills, and an attorney experienced in estate planning can make sure your grants or wills comply with all rule against perpetuities requirements.
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Last Modified: 01-10-2014 12:20 PM PST
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